Correlation Between Grupo Mxico and UNIVERSAL DISPLAY

Can any of the company-specific risk be diversified away by investing in both Grupo Mxico and UNIVERSAL DISPLAY 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 Grupo Mxico and UNIVERSAL DISPLAY into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Grupo Mxico SAB and UNIVERSAL DISPLAY, you can compare the effects of market volatilities on Grupo Mxico and UNIVERSAL DISPLAY 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 Grupo Mxico with a short position of UNIVERSAL DISPLAY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Mxico and UNIVERSAL DISPLAY.

Diversification Opportunities for Grupo Mxico and UNIVERSAL DISPLAY

0.08

Correlation Coefficient

Grupo Mxico  UNIVERSAL DISPLAY

Significant diversification

The 3 months correlation between Grupo and UNIVERSAL is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Mxico SAB and UNIVERSAL DISPLAY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIVERSAL DISPLAY and Grupo Mxico 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 Grupo Mxico SAB are associated (or correlated) with UNIVERSAL DISPLAY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIVERSAL DISPLAY has no effect on the direction of Grupo Mxico i.e., Grupo Mxico and UNIVERSAL DISPLAY go up and down completely randomly.

Pair Corralation between Grupo Mxico and UNIVERSAL DISPLAY

Assuming the 90 days horizon Grupo Mxico SAB is expected to generate 1.13 times more return on investment than UNIVERSAL DISPLAY. However, Grupo Mxico is 1.13 times more volatile than UNIVERSAL DISPLAY. It trades about 0.06 of its potential returns per unit of risk. UNIVERSAL DISPLAY is currently generating about -0.03 per unit of risk. If you would invest  460.00  in Grupo Mxico SAB on December 21, 2024 and sell it today you would earn a total of  33.00  from holding Grupo Mxico SAB or generate 7.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Grupo Mxico SAB  vs.  UNIVERSAL DISPLAY

Grupo Mxico SAB

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Mxico SAB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Grupo Mxico may actually be approaching a critical reversion point that can send shares even higher in April 2025.

UNIVERSAL DISPLAY

Risk-Adjusted Performance

Very Weak

Over the last 90 days UNIVERSAL DISPLAY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, UNIVERSAL DISPLAY is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Grupo Mxico and UNIVERSAL DISPLAY

The main advantage of trading using opposite Grupo Mxico and UNIVERSAL DISPLAY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Mxico position performs unexpectedly, UNIVERSAL DISPLAY 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 UNIVERSAL DISPLAY will offset losses from the drop in UNIVERSAL DISPLAY's long position.

The idea behind Grupo Mxico SAB and UNIVERSAL DISPLAY 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.