Correlation Between ZoomerMedia and Universal Media

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

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

Diversification Opportunities for ZoomerMedia and Universal Media

-0.39

Correlation Coefficient

ZoomerMedia  Universal Media

Very good diversification

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

Pair Corralation between ZoomerMedia and Universal Media

Assuming the 90 days horizon ZoomerMedia Limited is expected to generate 3.96 times more return on investment than Universal Media. However, ZoomerMedia is 3.96 times more volatile than Universal Media Group. It trades about 0.05 of its potential returns per unit of risk. Universal Media Group is currently generating about 0.0 per unit of risk. If you would invest  2.00  in ZoomerMedia Limited on October 11, 2024 and sell it today you would earn a total of  3.00  from holding ZoomerMedia Limited or generate 150.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.53%
Values	Daily Returns

ZoomerMedia Limited  vs.  Universal Media Group

ZoomerMedia Limited

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days ZoomerMedia Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, ZoomerMedia reported solid returns over the last few months and may actually be approaching a breakup point.

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 current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with ZoomerMedia and Universal Media

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

The idea behind ZoomerMedia Limited and Universal Media Group 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.