Correlation Between Apple and UNIVERSAL DISPLAY

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

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

Diversification Opportunities for Apple and UNIVERSAL DISPLAY

-0.1

Correlation Coefficient

Apple  UNIVERSAL DISPLAY

Good diversification

The 3 months correlation between Apple and UNIVERSAL is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and UNIVERSAL DISPLAY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIVERSAL DISPLAY and Apple 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 Apple Inc 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 Apple i.e., Apple and UNIVERSAL DISPLAY go up and down completely randomly.

Pair Corralation between Apple and UNIVERSAL DISPLAY

Assuming the 90 days trading horizon Apple is expected to generate 60.02 times less return on investment than UNIVERSAL DISPLAY. But when comparing it to its historical volatility, Apple Inc is 1.55 times less risky than UNIVERSAL DISPLAY. It trades about 0.0 of its potential returns per unit of risk. UNIVERSAL DISPLAY is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  10,833  in UNIVERSAL DISPLAY on April 25, 2025 and sell it today you would earn a total of  2,017  from holding UNIVERSAL DISPLAY or generate 18.62% return on investment over 90 days.

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

Apple Inc  vs.  UNIVERSAL DISPLAY

Apple Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Apple is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

UNIVERSAL DISPLAY

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UNIVERSAL DISPLAY are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, UNIVERSAL DISPLAY unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and UNIVERSAL DISPLAY

The main advantage of trading using opposite Apple and UNIVERSAL DISPLAY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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 Apple Inc 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.