Correlation Between Universal Display and Vestis

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

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

Diversification Opportunities for Universal Display and Vestis

-0.42

Correlation Coefficient

Universal Display  Vestis

Very good diversification

The 3 months correlation between Universal and Vestis is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display and Vestis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestis 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 are associated (or correlated) with Vestis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestis has no effect on the direction of Universal Display i.e., Universal Display and Vestis go up and down completely randomly.

Pair Corralation between Universal Display and Vestis

Given the investment horizon of 90 days Universal Display is expected to under-perform the Vestis. In addition to that, Universal Display is 1.02 times more volatile than Vestis. It trades about -0.19 of its total potential returns per unit of risk. Vestis is currently generating about -0.13 per unit of volatility. If you would invest  1,615  in Vestis on September 28, 2024 and sell it today you would lose (85.00) from holding Vestis or give up 5.26% of portfolio value over 90 days.

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

Universal Display  vs.  Vestis

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. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Vestis

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vestis are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Vestis may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Universal Display and Vestis

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

The idea behind Universal Display and Vestis 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.