Correlation Between ASM International and Universal Display

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

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

Diversification Opportunities for ASM International and Universal Display

0.88

Correlation Coefficient

ASM International  Universal Display

Very poor diversification

The 3 months correlation between ASM and Universal is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding ASM International NV and Universal Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display and ASM International 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 ASM International NV 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 ASM International i.e., ASM International and Universal Display go up and down completely randomly.

Pair Corralation between ASM International and Universal Display

Assuming the 90 days horizon ASM International NV is expected to generate 0.86 times more return on investment than Universal Display. However, ASM International NV is 1.16 times less risky than Universal Display. It trades about 0.2 of its potential returns per unit of risk. Universal Display is currently generating about 0.14 per unit of risk. If you would invest  40,408  in ASM International NV on April 23, 2025 and sell it today you would earn a total of  11,812  from holding ASM International NV or generate 29.23% return on investment over 90 days.

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

ASM International NV  vs.  Universal Display

ASM International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ASM International NV are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ASM International reported solid returns over the last few months and may actually be approaching a breakup point.

Universal Display

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Display are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Universal Display reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASM International and Universal Display

The main advantage of trading using opposite ASM International and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASM International 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 ASM International NV 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.