Correlation Between Hongkong Land and UNIVERSAL MUSIC
Can any of the company-specific risk be diversified away by investing in both Hongkong Land 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 Hongkong Land and UNIVERSAL MUSIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hongkong Land Holdings and UNIVERSAL MUSIC GROUP, you can compare the effects of market volatilities on Hongkong Land 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 Hongkong Land with a short position of UNIVERSAL MUSIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hongkong Land and UNIVERSAL MUSIC.
Diversification Opportunities for Hongkong Land and UNIVERSAL MUSIC
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hongkong and UNIVERSAL is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Hongkong Land Holdings 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 Hongkong Land 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 Hongkong Land Holdings 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 Hongkong Land i.e., Hongkong Land and UNIVERSAL MUSIC go up and down completely randomly.
Pair Corralation between Hongkong Land and UNIVERSAL MUSIC
Assuming the 90 days horizon Hongkong Land Holdings is expected to generate 1.19 times more return on investment than UNIVERSAL MUSIC. However, Hongkong Land is 1.19 times more volatile than UNIVERSAL MUSIC GROUP. It trades about 0.09 of its potential returns per unit of risk. UNIVERSAL MUSIC GROUP is currently generating about 0.02 per unit of risk. If you would invest 275.00 in Hongkong Land Holdings on September 14, 2024 and sell it today you would earn a total of 161.00 from holding Hongkong Land Holdings or generate 58.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hongkong Land Holdings vs. UNIVERSAL MUSIC GROUP
Performance |
| Timeline |
| Hongkong Land Holdings |
| UNIVERSAL MUSIC GROUP |
Hongkong Land and UNIVERSAL MUSIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hongkong Land and UNIVERSAL MUSIC
The main advantage of trading using opposite Hongkong Land and UNIVERSAL MUSIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hongkong Land 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.| Hongkong Land vs. UNIVERSAL MUSIC GROUP | Hongkong Land vs. Zijin Mining Group | Hongkong Land vs. Vulcan Materials | Hongkong Land vs. Sumitomo Rubber Industries |
| UNIVERSAL MUSIC vs. Apple Inc | UNIVERSAL MUSIC vs. Apple Inc | UNIVERSAL MUSIC vs. Apple Inc | UNIVERSAL MUSIC vs. Apple 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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