Correlation Between Universal Media and Bilibili

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

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

Diversification Opportunities for Universal Media and Bilibili

0.45

Correlation Coefficient

Universal Media  Bilibili

Very weak diversification

The 3 months correlation between Universal and Bilibili is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Universal Media Group and Bilibili in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bilibili and Universal Media 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 Media Group are associated (or correlated) with Bilibili. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bilibili has no effect on the direction of Universal Media i.e., Universal Media and Bilibili go up and down completely randomly.

Pair Corralation between Universal Media and Bilibili

Given the investment horizon of 90 days Universal Media Group is expected to generate 4.24 times more return on investment than Bilibili. However, Universal Media is 4.24 times more volatile than Bilibili. It trades about -0.02 of its potential returns per unit of risk. Bilibili is currently generating about -0.43 per unit of risk. If you would invest  2.60  in Universal Media Group on October 10, 2024 and sell it today you would lose (0.50) from holding Universal Media Group or give up 19.23% of portfolio value over 90 days.

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

Universal Media Group  vs.  Bilibili

Universal Media Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Media Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Universal Media is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Bilibili

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bilibili has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Universal Media and Bilibili

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

The idea behind Universal Media Group and Bilibili 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.