Correlation Between UNIVERSAL MUSIC and Haier Smart
Can any of the company-specific risk be diversified away by investing in both UNIVERSAL MUSIC and Haier Smart 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 Haier Smart 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 Haier Smart Home, you can compare the effects of market volatilities on UNIVERSAL MUSIC and Haier Smart 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 Haier Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNIVERSAL MUSIC and Haier Smart.
Diversification Opportunities for UNIVERSAL MUSIC and Haier Smart
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between UNIVERSAL and Haier is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding UNIVERSAL MUSIC GROUP and Haier Smart Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haier Smart Home 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 Haier Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haier Smart Home has no effect on the direction of UNIVERSAL MUSIC i.e., UNIVERSAL MUSIC and Haier Smart go up and down completely randomly.
Pair Corralation between UNIVERSAL MUSIC and Haier Smart
Assuming the 90 days horizon UNIVERSAL MUSIC GROUP is expected to generate 0.57 times more return on investment than Haier Smart. However, UNIVERSAL MUSIC GROUP is 1.74 times less risky than Haier Smart. It trades about 0.05 of its potential returns per unit of risk. Haier Smart Home is currently generating about 0.01 per unit of risk. If you would invest 2,309 in UNIVERSAL MUSIC GROUP on September 13, 2024 and sell it today you would earn a total of 25.00 from holding UNIVERSAL MUSIC GROUP or generate 1.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNIVERSAL MUSIC GROUP vs. Haier Smart Home
Performance |
| Timeline |
| UNIVERSAL MUSIC GROUP |
| Haier Smart Home |
UNIVERSAL MUSIC and Haier Smart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNIVERSAL MUSIC and Haier Smart
The main advantage of trading using opposite UNIVERSAL MUSIC and Haier Smart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNIVERSAL MUSIC position performs unexpectedly, Haier Smart 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 Haier Smart will offset losses from the drop in Haier Smart's long position.| UNIVERSAL MUSIC vs. Apple Inc | UNIVERSAL MUSIC vs. Apple Inc | UNIVERSAL MUSIC vs. Apple Inc | UNIVERSAL MUSIC vs. Apple Inc |
| Haier Smart vs. GEAR4MUSIC LS 10 | Haier Smart vs. Grupo Carso SAB | Haier Smart vs. CVR Medical Corp | Haier Smart vs. Cars Inc |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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