Correlation Between Universal Music and Raytech Holding
Can any of the company-specific risk be diversified away by investing in both Universal Music and Raytech Holding 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 Raytech Holding 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 Raytech Holding Limited, you can compare the effects of market volatilities on Universal Music and Raytech Holding 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 Raytech Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Music and Raytech Holding.
Diversification Opportunities for Universal Music and Raytech Holding
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Universal and Raytech is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Universal Music Group and Raytech Holding Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytech Holding 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 Raytech Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raytech Holding has no effect on the direction of Universal Music i.e., Universal Music and Raytech Holding go up and down completely randomly.
Pair Corralation between Universal Music and Raytech Holding
Assuming the 90 days horizon Universal Music Group is expected to generate 0.13 times more return on investment than Raytech Holding. However, Universal Music Group is 7.76 times less risky than Raytech Holding. It trades about -0.08 of its potential returns per unit of risk. Raytech Holding Limited is currently generating about -0.09 per unit of risk. If you would invest 1,582 in Universal Music Group on May 31, 2025 and sell it today you would lose (134.00) from holding Universal Music Group or give up 8.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Music Group vs. Raytech Holding Limited
Performance |
| Timeline |
| Universal Music Group |
| Raytech Holding |
Universal Music and Raytech Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Music and Raytech Holding
The main advantage of trading using opposite Universal Music and Raytech Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Music position performs unexpectedly, Raytech Holding 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 Raytech Holding will offset losses from the drop in Raytech Holding's long position.| Universal Music vs. Walt Disney | Universal Music vs. Live Nation Entertainment | Universal Music vs. Warner Bros Discovery | Universal Music vs. Fox Corp Class |
| Raytech Holding vs. Zhihu Inc ADR | Raytech Holding vs. Joint Stock | Raytech Holding vs. Uber Technologies | Raytech Holding vs. NetSol Technologies |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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