Correlation Between Harman International and Universal Electronics

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

By analyzing existing cross correlation between Harman International Industries and Universal Electronics, you can compare the effects of market volatilities on Harman International 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 Harman International with a short position of Universal Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harman International and Universal Electronics.

Diversification Opportunities for Harman International and Universal Electronics

0.0

Correlation Coefficient

Harman International  Universal Electronics

Pay attention - limited upside

The 3 months correlation between Harman and Universal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Harman International Industrie and Universal Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Electronics and Harman International 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 Harman International Industries 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 Harman International i.e., Harman International and Universal Electronics go up and down completely randomly.

Pair Corralation between Harman International and Universal Electronics

If you would invest  999.00  in Universal Electronics on February 2, 2024 and sell it today you would earn a total of  95.00  from holding Universal Electronics or generate 9.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Harman International Industrie  vs.  Universal Electronics

Harman International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harman International Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Harman International is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Universal Electronics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Electronics are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting forward indicators, Universal Electronics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Harman International and Universal Electronics

The main advantage of trading using opposite Harman International and Universal Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harman International 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 Harman International Industries 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.

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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 Stocks Directory module to find actively traded stocks across global markets.