Correlation Between Universal Display and GCL Global

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

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

Diversification Opportunities for Universal Display and GCL Global

0.2

Correlation Coefficient

Universal Display  GCL Global

Modest diversification

The 3 months correlation between Universal and GCL is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display and GCL Global Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GCL Global Holdings 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 GCL Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GCL Global Holdings has no effect on the direction of Universal Display i.e., Universal Display and GCL Global go up and down completely randomly.

Pair Corralation between Universal Display and GCL Global

Assuming the 90 days horizon Universal Display is expected to generate 0.09 times more return on investment than GCL Global. However, Universal Display is 10.78 times less risky than GCL Global. It trades about 0.0 of its potential returns per unit of risk. GCL Global Holdings is currently generating about -0.02 per unit of risk. If you would invest  14,267  in Universal Display on December 28, 2024 and sell it today you would lose (182.00) from holding Universal Display or give up 1.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Universal Display  vs.  GCL Global Holdings

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. Despite nearly stable basic indicators, Universal Display is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

GCL Global Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days GCL Global Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Universal Display and GCL Global

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

The idea behind Universal Display and GCL Global Holdings 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.