Correlation Between FLOW TRADERS and Universal Display

Can any of the company-specific risk be diversified away by investing in both FLOW TRADERS 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 FLOW TRADERS and Universal Display into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FLOW TRADERS LTD and Universal Display, you can compare the effects of market volatilities on FLOW TRADERS 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 FLOW TRADERS with a short position of Universal Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLOW TRADERS and Universal Display.

Diversification Opportunities for FLOW TRADERS and Universal Display

-0.45

Correlation Coefficient

FLOW TRADERS  Universal Display

Very good diversification

The 3 months correlation between FLOW and Universal is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding FLOW TRADERS LTD and Universal Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display and FLOW TRADERS 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 FLOW TRADERS LTD 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 FLOW TRADERS i.e., FLOW TRADERS and Universal Display go up and down completely randomly.

Pair Corralation between FLOW TRADERS and Universal Display

Assuming the 90 days horizon FLOW TRADERS is expected to generate 3.84 times less return on investment than Universal Display. But when comparing it to its historical volatility, FLOW TRADERS LTD is 1.21 times less risky than Universal Display. It trades about 0.01 of its potential returns per unit of risk. Universal Display is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  10,230  in Universal Display on September 28, 2024 and sell it today you would earn a total of  4,240  from holding Universal Display or generate 41.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

FLOW TRADERS LTD  vs.  Universal Display

FLOW TRADERS LTD

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FLOW TRADERS LTD are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, FLOW TRADERS reported solid returns over the last few months and may actually be approaching a breakup point.

Universal Display

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Display has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with FLOW TRADERS and Universal Display

The main advantage of trading using opposite FLOW TRADERS and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLOW TRADERS 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 FLOW TRADERS LTD 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.