Correlation Between Universal Electronics and Apple

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Can any of the company-specific risk be diversified away by investing in both Universal Electronics and Apple 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 Electronics and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Electronics and Apple Inc, you can compare the effects of market volatilities on Universal Electronics and Apple 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 Electronics with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Electronics and Apple.

Diversification Opportunities for Universal Electronics and Apple

-0.21
  Correlation Coefficient

Very good diversification

The 3 months correlation between Universal and Apple is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Universal Electronics and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Universal Electronics 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 Electronics are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Universal Electronics i.e., Universal Electronics and Apple go up and down completely randomly.

Pair Corralation between Universal Electronics and Apple

Given the investment horizon of 90 days Universal Electronics is expected to under-perform the Apple. In addition to that, Universal Electronics is 2.12 times more volatile than Apple Inc. It trades about -0.04 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.03 per unit of volatility. If you would invest  14,725  in Apple Inc on December 29, 2023 and sell it today you would earn a total of  2,606  from holding Apple Inc or generate 17.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Universal Electronics  vs.  Apple Inc

 Performance 
       Timeline  
Universal Electronics 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Universal Electronics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, Universal Electronics may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Apple Inc 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Universal Electronics and Apple Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Universal Electronics and Apple

The main advantage of trading using opposite Universal Electronics and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Electronics position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.
The idea behind Universal Electronics and Apple Inc 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 Global Correlations module to find global opportunities by holding instruments from different markets.

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