Correlation Between ALIBABA and Universal Music
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By analyzing existing cross correlation between ALIBABA GROUP HLDG and Universal Music Group, you can compare the effects of market volatilities on ALIBABA 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 ALIBABA with a short position of Universal Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALIBABA and Universal Music.
Diversification Opportunities for ALIBABA and Universal Music
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ALIBABA and Universal is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding ALIBABA GROUP HLDG 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 ALIBABA 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 ALIBABA GROUP HLDG 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 ALIBABA i.e., ALIBABA and Universal Music go up and down completely randomly.
Pair Corralation between ALIBABA and Universal Music
Assuming the 90 days trading horizon ALIBABA GROUP HLDG is expected to under-perform the Universal Music. But the bond apears to be less risky and, when comparing its historical volatility, ALIBABA GROUP HLDG is 3.03 times less risky than Universal Music. The bond trades about -0.3 of its potential returns per unit of risk. The Universal Music Group is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 2,505 in Universal Music Group on September 3, 2024 and sell it today you would lose (81.00) from holding Universal Music Group or give up 3.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 80.0% |
| Values | Daily Returns |
ALIBABA GROUP HLDG vs. Universal Music Group
Performance |
| Timeline |
| ALIBABA GROUP HLDG |
| Universal Music Group |
ALIBABA and Universal Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALIBABA and Universal Music
The main advantage of trading using opposite ALIBABA and Universal Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALIBABA 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.| ALIBABA vs. Centessa Pharmaceuticals PLC | ALIBABA vs. CapitaLand Investment Limited | ALIBABA vs. Akanda Corp | ALIBABA vs. Neogen |
| Universal Music vs. Thunderbird Entertainment Group | Universal Music vs. Warner Music Group | Universal Music vs. Live Nation Entertainment | Universal Music vs. Atlanta Braves Holdings, |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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