Correlation Between UNIVMUSIC GRPADR050 and Diamyd Medical

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Can any of the company-specific risk be diversified away by investing in both UNIVMUSIC GRPADR050 and Diamyd Medical 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 UNIVMUSIC GRPADR050 and Diamyd Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNIVMUSIC GRPADR050 and Diamyd Medical AB, you can compare the effects of market volatilities on UNIVMUSIC GRPADR050 and Diamyd Medical 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 UNIVMUSIC GRPADR050 with a short position of Diamyd Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNIVMUSIC GRPADR050 and Diamyd Medical.

Diversification Opportunities for UNIVMUSIC GRPADR050 and Diamyd Medical

UNIVMUSICDiamydDiversified AwayUNIVMUSICDiamydDiversified Away100%
0.55
  Correlation Coefficient

Very weak diversification

The 3 months correlation between UNIVMUSIC and Diamyd is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding UNIVMUSIC GRPADR050 and Diamyd Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamyd Medical AB and UNIVMUSIC GRPADR050 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 UNIVMUSIC GRPADR050 are associated (or correlated) with Diamyd Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamyd Medical AB has no effect on the direction of UNIVMUSIC GRPADR050 i.e., UNIVMUSIC GRPADR050 and Diamyd Medical go up and down completely randomly.

Pair Corralation between UNIVMUSIC GRPADR050 and Diamyd Medical

Assuming the 90 days trading horizon UNIVMUSIC GRPADR050 is expected to generate 1.1 times more return on investment than Diamyd Medical. However, UNIVMUSIC GRPADR050 is 1.1 times more volatile than Diamyd Medical AB. It trades about 0.34 of its potential returns per unit of risk. Diamyd Medical AB is currently generating about -0.29 per unit of risk. If you would invest  1,200  in UNIVMUSIC GRPADR050 on November 23, 2024 and sell it today you would earn a total of  170.00  from holding UNIVMUSIC GRPADR050 or generate 14.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

UNIVMUSIC GRPADR050  vs.  Diamyd Medical AB

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 01020304050
JavaScript chart by amCharts 3.21.150VD0 DMN
       Timeline  
UNIVMUSIC GRPADR050 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in UNIVMUSIC GRPADR050 are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental indicators, UNIVMUSIC GRPADR050 reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1111.51212.51313.514
Diamyd Medical AB 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Diamyd Medical AB are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Diamyd Medical reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb11.11.21.31.41.51.6

UNIVMUSIC GRPADR050 and Diamyd Medical Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.32-3.24-2.15-1.070.01811.192.413.624.83 0.050.100.15
JavaScript chart by amCharts 3.21.150VD0 DMN
       Returns  

Pair Trading with UNIVMUSIC GRPADR050 and Diamyd Medical

The main advantage of trading using opposite UNIVMUSIC GRPADR050 and Diamyd Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNIVMUSIC GRPADR050 position performs unexpectedly, Diamyd Medical 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 Diamyd Medical will offset losses from the drop in Diamyd Medical's long position.
The idea behind UNIVMUSIC GRPADR050 and Diamyd Medical AB 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.
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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