Correlation Between Universal Display and Intermediate Capital

Can any of the company-specific risk be diversified away by investing in both Universal Display and Intermediate Capital at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Universal Display and Intermediate Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Universal Display Corp and Intermediate Capital Group, you can compare the effects of market volatilities on Universal Display and Intermediate Capital and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Universal Display with a short position of Intermediate Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and Intermediate Capital.

Diversification Opportunities for Universal Display and Intermediate Capital

0.0

Correlation Coefficient

Universal Display  Intermediate Capital

Pay attention - limited upside

The 3 months correlation between Universal and Intermediate is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display Corp and Intermediate Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Capital and Universal Display is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Universal Display Corp are associated (or correlated) with Intermediate Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Capital has no effect on the direction of Universal Display i.e., Universal Display and Intermediate Capital go up and down completely randomly.

Pair Corralation between Universal Display and Intermediate Capital

Assuming the 90 days trading horizon Universal Display Corp is expected to under-perform the Intermediate Capital. In addition to that, Universal Display is 1.25 times more volatile than Intermediate Capital Group. It trades about -0.2 of its total potential returns per unit of risk. Intermediate Capital Group is currently generating about 0.07 per unit of volatility. If you would invest  209,268  in Intermediate Capital Group on October 24, 2024 and sell it today you would earn a total of  16,532  from holding Intermediate Capital Group or generate 7.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	93.55%
Values	Daily Returns

Universal Display Corp  vs.  Intermediate Capital Group

Universal Display Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Display Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Intermediate Capital

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intermediate Capital Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Intermediate Capital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Universal Display and Intermediate Capital

The main advantage of trading using opposite Universal Display and Intermediate Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, Intermediate Capital can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Intermediate Capital will offset losses from the drop in Intermediate Capital's long position.

The idea behind Universal Display Corp and Intermediate Capital Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.