Correlation Between ATRESMEDIA and Universal Entertainment

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

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

Diversification Opportunities for ATRESMEDIA and Universal Entertainment

0.48

Correlation Coefficient

ATRESMEDIA  Universal Entertainment

Very weak diversification

The 3 months correlation between ATRESMEDIA and Universal is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding ATRESMEDIA and Universal Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Entertainment and ATRESMEDIA 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 ATRESMEDIA are associated (or correlated) with Universal Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Entertainment has no effect on the direction of ATRESMEDIA i.e., ATRESMEDIA and Universal Entertainment go up and down completely randomly.

Pair Corralation between ATRESMEDIA and Universal Entertainment

Assuming the 90 days trading horizon ATRESMEDIA is expected to generate 0.56 times more return on investment than Universal Entertainment. However, ATRESMEDIA is 1.79 times less risky than Universal Entertainment. It trades about 0.13 of its potential returns per unit of risk. Universal Entertainment is currently generating about 0.02 per unit of risk. If you would invest  429.00  in ATRESMEDIA on November 29, 2024 and sell it today you would earn a total of  49.00  from holding ATRESMEDIA or generate 11.42% return on investment over 90 days.

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

ATRESMEDIA  vs.  Universal Entertainment

ATRESMEDIA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ATRESMEDIA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, ATRESMEDIA may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Universal Entertainment

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Entertainment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Universal Entertainment is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ATRESMEDIA and Universal Entertainment

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

The idea behind ATRESMEDIA and Universal Entertainment 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .