Correlation Between Universal Display and Endeavour Mining

Can any of the company-specific risk be diversified away by investing in both Universal Display and Endeavour Mining 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 Endeavour Mining 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 Endeavour Mining Corp, you can compare the effects of market volatilities on Universal Display and Endeavour Mining 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 Endeavour Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and Endeavour Mining.

Diversification Opportunities for Universal Display and Endeavour Mining

0.91

Correlation Coefficient

Universal Display  Endeavour Mining

Almost no diversification

The 3 months correlation between Universal and Endeavour is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display Corp and Endeavour Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endeavour Mining Corp 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 Endeavour Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endeavour Mining Corp has no effect on the direction of Universal Display i.e., Universal Display and Endeavour Mining go up and down completely randomly.

Pair Corralation between Universal Display and Endeavour Mining

Assuming the 90 days trading horizon Universal Display Corp is expected to under-perform the Endeavour Mining. In addition to that, Universal Display is 1.16 times more volatile than Endeavour Mining Corp. It trades about -0.19 of its total potential returns per unit of risk. Endeavour Mining Corp is currently generating about -0.16 per unit of volatility. If you would invest  184,600  in Endeavour Mining Corp on September 24, 2024 and sell it today you would lose (40,000) from holding Endeavour Mining Corp or give up 21.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.46%
Values	Daily Returns

Universal Display Corp  vs.  Endeavour Mining Corp

Universal Display Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Display Corp 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Endeavour Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Endeavour Mining Corp 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Universal Display and Endeavour Mining

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

The idea behind Universal Display Corp and Endeavour Mining Corp 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.