Correlation Between Sony and Universal Electronics
Can any of the company-specific risk be diversified away by investing in both Sony 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 Sony and Universal Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sony Group and Universal Electronics, you can compare the effects of market volatilities on Sony 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 Sony with a short position of Universal Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sony and Universal Electronics.
Diversification Opportunities for Sony and Universal Electronics
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sony and Universal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sony Group and Universal Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Electronics and Sony 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 Sony Group 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 Sony i.e., Sony and Universal Electronics go up and down completely randomly.
Pair Corralation between Sony and Universal Electronics
If you would invest 1,000.00 in Universal Electronics on January 20, 2024 and sell it today you would earn a total of 21.00 from holding Universal Electronics or generate 2.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Sony Group vs. Universal Electronics
Performance |
| Timeline |
| Sony Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Universal Electronics |
Sony and Universal Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sony and Universal Electronics
The main advantage of trading using opposite Sony and Universal Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sony 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.The idea behind Sony Group and Universal Electronics 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.| Universal Electronics vs. LG Display Co | Universal Electronics vs. The Singing Machine | Universal Electronics vs. Wearable Devices | Universal Electronics vs. Zepp Health 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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