Correlation Between Universal Music and AcadeMedia
Can any of the company-specific risk be diversified away by investing in both Universal Music and AcadeMedia 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 AcadeMedia 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 AcadeMedia AB, you can compare the effects of market volatilities on Universal Music and AcadeMedia 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 AcadeMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Music and AcadeMedia.
Diversification Opportunities for Universal Music and AcadeMedia
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Universal and AcadeMedia is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Universal Music Group and AcadeMedia AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AcadeMedia AB 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 AcadeMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AcadeMedia AB has no effect on the direction of Universal Music i.e., Universal Music and AcadeMedia go up and down completely randomly.
Pair Corralation between Universal Music and AcadeMedia
Assuming the 90 days trading horizon Universal Music Group is expected to under-perform the AcadeMedia. But the stock apears to be less risky and, when comparing its historical volatility, Universal Music Group is 1.42 times less risky than AcadeMedia. The stock trades about -0.07 of its potential returns per unit of risk. The AcadeMedia AB is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 6,600 in AcadeMedia AB on October 17, 2024 and sell it today you would lose (20.00) from holding AcadeMedia AB or give up 0.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Music Group vs. AcadeMedia AB
Performance |
| Timeline |
| Universal Music Group |
| AcadeMedia AB |
Universal Music and AcadeMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Music and AcadeMedia
The main advantage of trading using opposite Universal Music and AcadeMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Music position performs unexpectedly, AcadeMedia 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 AcadeMedia will offset losses from the drop in AcadeMedia's long position.| Universal Music vs. Geely Automobile Holdings | Universal Music vs. Zegona Communications Plc | Universal Music vs. Fonix Mobile plc | Universal Music vs. Indutrade AB |
| AcadeMedia vs. Aptitude Software Group | AcadeMedia vs. Primorus Investments plc | AcadeMedia vs. SMA Solar Technology | AcadeMedia vs. Allianz Technology Trust |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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