Correlation Between UNIVERSAL MUSIC and INDOFOOD AGRI
Can any of the company-specific risk be diversified away by investing in both UNIVERSAL MUSIC and INDOFOOD AGRI 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 INDOFOOD AGRI 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 INDOFOOD AGRI RES, you can compare the effects of market volatilities on UNIVERSAL MUSIC and INDOFOOD AGRI 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 INDOFOOD AGRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNIVERSAL MUSIC and INDOFOOD AGRI.
Diversification Opportunities for UNIVERSAL MUSIC and INDOFOOD AGRI
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UNIVERSAL and INDOFOOD is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding UNIVERSAL MUSIC GROUP and INDOFOOD AGRI RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDOFOOD AGRI RES 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 INDOFOOD AGRI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDOFOOD AGRI RES has no effect on the direction of UNIVERSAL MUSIC i.e., UNIVERSAL MUSIC and INDOFOOD AGRI go up and down completely randomly.
Pair Corralation between UNIVERSAL MUSIC and INDOFOOD AGRI
Assuming the 90 days horizon UNIVERSAL MUSIC GROUP is expected to generate 0.82 times more return on investment than INDOFOOD AGRI. However, UNIVERSAL MUSIC GROUP is 1.22 times less risky than INDOFOOD AGRI. It trades about 0.03 of its potential returns per unit of risk. INDOFOOD AGRI RES is currently generating about 0.02 per unit of risk. If you would invest 2,178 in UNIVERSAL MUSIC GROUP on November 6, 2024 and sell it today you would earn a total of 519.00 from holding UNIVERSAL MUSIC GROUP or generate 23.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNIVERSAL MUSIC GROUP vs. INDOFOOD AGRI RES
Performance |
| Timeline |
| UNIVERSAL MUSIC GROUP |
| INDOFOOD AGRI RES |
UNIVERSAL MUSIC and INDOFOOD AGRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNIVERSAL MUSIC and INDOFOOD AGRI
The main advantage of trading using opposite UNIVERSAL MUSIC and INDOFOOD AGRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNIVERSAL MUSIC position performs unexpectedly, INDOFOOD AGRI 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 INDOFOOD AGRI will offset losses from the drop in INDOFOOD AGRI's long position.| UNIVERSAL MUSIC vs. AEON STORES | UNIVERSAL MUSIC vs. National Retail Properties | UNIVERSAL MUSIC vs. ANGLO ASIAN MINING | UNIVERSAL MUSIC vs. BJs Wholesale Club |
| INDOFOOD AGRI vs. Algonquin Power Utilities | INDOFOOD AGRI vs. PLAYTIKA HOLDING DL 01 | INDOFOOD AGRI vs. Playtech plc | INDOFOOD AGRI vs. Columbia Sportswear |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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