Correlation Between Universal Music and Kinnevik Investment
Can any of the company-specific risk be diversified away by investing in both Universal Music and Kinnevik Investment 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 Music and Kinnevik Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Music Group and Kinnevik Investment AB, you can compare the effects of market volatilities on Universal Music and Kinnevik Investment 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 Music with a short position of Kinnevik Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Music and Kinnevik Investment.
Diversification Opportunities for Universal Music and Kinnevik Investment
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Universal and Kinnevik is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Universal Music Group and Kinnevik Investment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinnevik Investment and Universal Music 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 Music Group are associated (or correlated) with Kinnevik Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinnevik Investment has no effect on the direction of Universal Music i.e., Universal Music and Kinnevik Investment go up and down completely randomly.
Pair Corralation between Universal Music and Kinnevik Investment
Assuming the 90 days trading horizon Universal Music is expected to generate 1.69 times less return on investment than Kinnevik Investment. But when comparing it to its historical volatility, Universal Music Group is 1.31 times less risky than Kinnevik Investment. It trades about 0.25 of its potential returns per unit of risk. Kinnevik Investment AB is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 7,275 in Kinnevik Investment AB on September 14, 2024 and sell it today you would earn a total of 744.00 from holding Kinnevik Investment AB or generate 10.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Music Group vs. Kinnevik Investment AB
Performance |
| Timeline |
| Universal Music Group |
| Kinnevik Investment |
Universal Music and Kinnevik Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Music and Kinnevik Investment
The main advantage of trading using opposite Universal Music and Kinnevik Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Music position performs unexpectedly, Kinnevik Investment 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 Kinnevik Investment will offset losses from the drop in Kinnevik Investment's long position.| Universal Music vs. Sunny Optical Technology | Universal Music vs. Take Two Interactive Software | Universal Music vs. Endeavour Mining Corp | Universal Music vs. Caledonia Mining |
| Kinnevik Investment vs. Caledonia Mining | Kinnevik Investment vs. Lundin Mining Corp | Kinnevik Investment vs. Coeur Mining | Kinnevik Investment vs. Universal Music Group |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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