Correlation Between Universal Entertainment and Prosiebensat

Can any of the company-specific risk be diversified away by investing in both Universal Entertainment and Prosiebensat 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 Entertainment and Prosiebensat into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Universal Entertainment and Prosiebensat 1 Media, you can compare the effects of market volatilities on Universal Entertainment and Prosiebensat 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 Entertainment with a short position of Prosiebensat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Entertainment and Prosiebensat.

Diversification Opportunities for Universal Entertainment and Prosiebensat

0.56

Correlation Coefficient

Universal Entertainment  Prosiebensat

Very weak diversification

The 3 months correlation between Universal and Prosiebensat is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Universal Entertainment and Prosiebensat 1 Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosiebensat 1 Media and Universal Entertainment 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 Entertainment are associated (or correlated) with Prosiebensat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosiebensat 1 Media has no effect on the direction of Universal Entertainment i.e., Universal Entertainment and Prosiebensat go up and down completely randomly.

Pair Corralation between Universal Entertainment and Prosiebensat

Assuming the 90 days trading horizon Universal Entertainment is expected to under-perform the Prosiebensat. In addition to that, Universal Entertainment is 1.4 times more volatile than Prosiebensat 1 Media. It trades about -0.14 of its total potential returns per unit of risk. Prosiebensat 1 Media is currently generating about -0.1 per unit of volatility. If you would invest  616.00  in Prosiebensat 1 Media on October 4, 2024 and sell it today you would lose (97.00) from holding Prosiebensat 1 Media or give up 15.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Universal Entertainment  vs.  Prosiebensat 1 Media

Universal Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Prosiebensat 1 Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prosiebensat 1 Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Universal Entertainment and Prosiebensat

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

The idea behind Universal Entertainment and Prosiebensat 1 Media 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.