Correlation Between UNIVERSAL MUSIC and Alfa Financial

Can any of the company-specific risk be diversified away by investing in both UNIVERSAL MUSIC and Alfa Financial 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 Alfa Financial 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 Alfa Financial Software, you can compare the effects of market volatilities on UNIVERSAL MUSIC and Alfa Financial 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 Alfa Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNIVERSAL MUSIC and Alfa Financial.

Diversification Opportunities for UNIVERSAL MUSIC and Alfa Financial

-0.39

Correlation Coefficient

UNIVERSAL MUSIC  Alfa Financial

Very good diversification

The 3 months correlation between UNIVERSAL and Alfa is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding UNIVERSAL MUSIC GROUP and Alfa Financial Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Financial Software 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 Alfa Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Financial Software has no effect on the direction of UNIVERSAL MUSIC i.e., UNIVERSAL MUSIC and Alfa Financial go up and down completely randomly.

Pair Corralation between UNIVERSAL MUSIC and Alfa Financial

Assuming the 90 days horizon UNIVERSAL MUSIC GROUP is expected to under-perform the Alfa Financial. But the stock apears to be less risky and, when comparing its historical volatility, UNIVERSAL MUSIC GROUP is 1.58 times less risky than Alfa Financial. The stock trades about -0.04 of its potential returns per unit of risk. The Alfa Financial Software is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  214.00  in Alfa Financial Software on August 31, 2024 and sell it today you would earn a total of  46.00  from holding Alfa Financial Software or generate 21.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

UNIVERSAL MUSIC GROUP  vs.  Alfa Financial Software

UNIVERSAL MUSIC GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNIVERSAL MUSIC GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, UNIVERSAL MUSIC is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Alfa Financial Software

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alfa Financial Software are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Alfa Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UNIVERSAL MUSIC and Alfa Financial

The main advantage of trading using opposite UNIVERSAL MUSIC and Alfa Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNIVERSAL MUSIC position performs unexpectedly, Alfa Financial 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 Alfa Financial will offset losses from the drop in Alfa Financial's long position.

The idea behind UNIVERSAL MUSIC GROUP and Alfa Financial Software 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.