Correlation Between Universal Display and CIRCHEM AB

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

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

Diversification Opportunities for Universal Display and CIRCHEM AB

-0.63

Correlation Coefficient

Universal Display  CIRCHEM AB

Excellent diversification

The 3 months correlation between Universal and CIRCHEM is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display and CIRCHEM AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIRCHEM AB 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 CIRCHEM AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIRCHEM AB has no effect on the direction of Universal Display i.e., Universal Display and CIRCHEM AB go up and down completely randomly.

Pair Corralation between Universal Display and CIRCHEM AB

Assuming the 90 days horizon Universal Display is expected to generate 0.47 times more return on investment than CIRCHEM AB. However, Universal Display is 2.13 times less risky than CIRCHEM AB. It trades about 0.15 of its potential returns per unit of risk. CIRCHEM AB is currently generating about -0.04 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 Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Universal Display  vs.  CIRCHEM AB

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.

CIRCHEM AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days CIRCHEM AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Universal Display and CIRCHEM AB

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

The idea behind Universal Display and CIRCHEM AB 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.

Check out your portfolio center.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.