Correlation Between Universal Music and Cirmaker Technology

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

Diversification Opportunities for Universal Music and Cirmaker Technology

0.23

Correlation Coefficient

Universal Music  Cirmaker Technology

Modest diversification

The 3 months correlation between Universal and Cirmaker is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Universal Music Group and Cirmaker Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cirmaker Technology 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 Cirmaker Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cirmaker Technology has no effect on the direction of Universal Music i.e., Universal Music and Cirmaker Technology go up and down completely randomly.

Pair Corralation between Universal Music and Cirmaker Technology

Assuming the 90 days horizon Universal Music is expected to generate 11.2 times less return on investment than Cirmaker Technology. But when comparing it to its historical volatility, Universal Music Group is 8.1 times less risky than Cirmaker Technology. It trades about 0.09 of its potential returns per unit of risk. Cirmaker Technology is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  4.50  in Cirmaker Technology on December 22, 2024 and sell it today you would earn a total of  2.95  from holding Cirmaker Technology or generate 65.56% return on investment over 90 days.

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

Universal Music Group  vs.  Cirmaker Technology

Universal Music Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Music Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Universal Music may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Cirmaker Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cirmaker Technology are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, Cirmaker Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Universal Music and Cirmaker Technology

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

The idea behind Universal Music Group and Cirmaker Technology 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 Stocks Directory module to find actively traded stocks across global markets.