Correlation Between Universal Display and CEOTRONICS

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

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

Diversification Opportunities for Universal Display and CEOTRONICS

0.01

Correlation Coefficient

Universal Display  CEOTRONICS

Significant diversification

The 3 months correlation between Universal and CEOTRONICS is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display and CEOTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEOTRONICS 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 CEOTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEOTRONICS has no effect on the direction of Universal Display i.e., Universal Display and CEOTRONICS go up and down completely randomly.

Pair Corralation between Universal Display and CEOTRONICS

Assuming the 90 days horizon Universal Display is expected to generate 0.65 times more return on investment than CEOTRONICS. However, Universal Display is 1.54 times less risky than CEOTRONICS. It trades about 0.15 of its potential returns per unit of risk. CEOTRONICS is currently generating about 0.0 per unit of risk. If you would invest  10,450  in Universal Display on April 24, 2025 and sell it today you would earn a total of  2,520  from holding Universal Display or generate 24.11% return on investment over 90 days.

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

Universal Display  vs.  CEOTRONICS

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.

CEOTRONICS

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Universal Display and CEOTRONICS

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

The idea behind Universal Display and CEOTRONICS 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.