Correlation Between Universal Display and Bytes Technology

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

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

Diversification Opportunities for Universal Display and Bytes Technology

-0.29

Correlation Coefficient

Universal Display  Bytes Technology

Very good diversification

The 3 months correlation between Universal and Bytes is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display Corp and Bytes Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bytes Technology 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 Corp are associated (or correlated) with Bytes Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bytes Technology has no effect on the direction of Universal Display i.e., Universal Display and Bytes Technology go up and down completely randomly.

Pair Corralation between Universal Display and Bytes Technology

Assuming the 90 days trading horizon Universal Display Corp is expected to generate 0.68 times more return on investment than Bytes Technology. However, Universal Display Corp is 1.47 times less risky than Bytes Technology. It trades about 0.16 of its potential returns per unit of risk. Bytes Technology is currently generating about -0.1 per unit of risk. If you would invest  11,525  in Universal Display Corp on April 20, 2025 and sell it today you would earn a total of  3,573  from holding Universal Display Corp or generate 31.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Universal Display Corp  vs.  Bytes Technology

Universal Display Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Display Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Universal Display unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bytes Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bytes Technology 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 basic indicators remain comparatively stable which may send shares a bit higher in August 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Universal Display and Bytes Technology

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

The idea behind Universal Display Corp and Bytes Technology 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.