Correlation Between TIANDE CHEMICAL and Universal Display

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

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

Diversification Opportunities for TIANDE CHEMICAL and Universal Display

-0.56

Correlation Coefficient

TIANDE CHEMICAL  Universal Display

Excellent diversification

The 3 months correlation between TIANDE and Universal is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding TIANDE CHEMICAL and Universal Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display and TIANDE CHEMICAL 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 TIANDE CHEMICAL 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 TIANDE CHEMICAL i.e., TIANDE CHEMICAL and Universal Display go up and down completely randomly.

Pair Corralation between TIANDE CHEMICAL and Universal Display

If you would invest  7.25  in TIANDE CHEMICAL on October 8, 2024 and sell it today you would earn a total of  0.00  from holding TIANDE CHEMICAL or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.75%
Values	Daily Returns

TIANDE CHEMICAL  vs.  Universal Display

TIANDE CHEMICAL

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days TIANDE CHEMICAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather uncertain basic indicators, TIANDE CHEMICAL exhibited 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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with TIANDE CHEMICAL and Universal Display

The main advantage of trading using opposite TIANDE CHEMICAL and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TIANDE CHEMICAL 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 TIANDE CHEMICAL 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.