Correlation Between Koninklijke Philips and Universal Electronics
Can any of the company-specific risk be diversified away by investing in both Koninklijke Philips and Universal Electronics 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 Koninklijke Philips and Universal Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Koninklijke Philips NV and Universal Electronics, you can compare the effects of market volatilities on Koninklijke Philips and Universal Electronics 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 Koninklijke Philips with a short position of Universal Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke Philips and Universal Electronics.
Diversification Opportunities for Koninklijke Philips and Universal Electronics
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Koninklijke and Universal is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke Philips NV and Universal Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Electronics and Koninklijke Philips 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 Koninklijke Philips NV are associated (or correlated) with Universal Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Electronics has no effect on the direction of Koninklijke Philips i.e., Koninklijke Philips and Universal Electronics go up and down completely randomly.
Pair Corralation between Koninklijke Philips and Universal Electronics
Considering the 90-day investment horizon Koninklijke Philips NV is expected to generate 0.66 times more return on investment than Universal Electronics. However, Koninklijke Philips NV is 1.52 times less risky than Universal Electronics. It trades about 0.12 of its potential returns per unit of risk. Universal Electronics is currently generating about -0.09 per unit of risk. If you would invest 1,989 in Koninklijke Philips NV on January 24, 2024 and sell it today you would earn a total of 72.00 from holding Koninklijke Philips NV or generate 3.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Koninklijke Philips NV vs. Universal Electronics
Performance |
| Timeline |
| Koninklijke Philips |
| Universal Electronics |
Koninklijke Philips and Universal Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Koninklijke Philips and Universal Electronics
The main advantage of trading using opposite Koninklijke Philips and Universal Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koninklijke Philips position performs unexpectedly, Universal Electronics 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 Electronics will offset losses from the drop in Universal Electronics' long position.| Koninklijke Philips vs. HealthStream | Koninklijke Philips vs. National Research Corp | Koninklijke Philips vs. HealthEquity | Koninklijke Philips vs. Health Catalyst |
| Universal Electronics vs. Brunswick | Universal Electronics vs. Ralph Lauren Corp | Universal Electronics vs. Under Armour C | Universal Electronics vs. Dogness International Corp |
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.
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