Correlation Between Addtech AB and UNIVERSAL MUSIC
Can any of the company-specific risk be diversified away by investing in both Addtech AB and UNIVERSAL MUSIC 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 Addtech AB and UNIVERSAL MUSIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addtech AB and UNIVERSAL MUSIC GROUP, you can compare the effects of market volatilities on Addtech AB and UNIVERSAL MUSIC 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 Addtech AB with a short position of UNIVERSAL MUSIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addtech AB and UNIVERSAL MUSIC.
Diversification Opportunities for Addtech AB and UNIVERSAL MUSIC
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Addtech and UNIVERSAL is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Addtech AB and UNIVERSAL MUSIC GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIVERSAL MUSIC GROUP and Addtech AB 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 Addtech AB are associated (or correlated) with UNIVERSAL MUSIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIVERSAL MUSIC GROUP has no effect on the direction of Addtech AB i.e., Addtech AB and UNIVERSAL MUSIC go up and down completely randomly.
Pair Corralation between Addtech AB and UNIVERSAL MUSIC
Assuming the 90 days trading horizon Addtech AB is expected to generate 2.51 times less return on investment than UNIVERSAL MUSIC. In addition to that, Addtech AB is 1.24 times more volatile than UNIVERSAL MUSIC GROUP. It trades about 0.1 of its total potential returns per unit of risk. UNIVERSAL MUSIC GROUP is currently generating about 0.32 per unit of volatility. If you would invest 2,417 in UNIVERSAL MUSIC GROUP on November 4, 2024 and sell it today you would earn a total of 270.00 from holding UNIVERSAL MUSIC GROUP or generate 11.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Addtech AB vs. UNIVERSAL MUSIC GROUP
Performance |
| Timeline |
| Addtech AB |
| UNIVERSAL MUSIC GROUP |
Addtech AB and UNIVERSAL MUSIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addtech AB and UNIVERSAL MUSIC
The main advantage of trading using opposite Addtech AB and UNIVERSAL MUSIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addtech AB position performs unexpectedly, UNIVERSAL MUSIC 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 UNIVERSAL MUSIC will offset losses from the drop in UNIVERSAL MUSIC's long position.| Addtech AB vs. COVIVIO HOTELS INH | Addtech AB vs. Hyatt Hotels | Addtech AB vs. HYATT HOTELS A | Addtech AB vs. Meli Hotels International |
| UNIVERSAL MUSIC vs. QINGCI GAMES INC | UNIVERSAL MUSIC vs. GAMING FAC SA | UNIVERSAL MUSIC vs. FRACTAL GAMING GROUP | UNIVERSAL MUSIC vs. ZINC MEDIA GR |
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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