Correlation Between Universal Music and AFC Ajax

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

Diversification Opportunities for Universal Music and AFC Ajax

0.38

Correlation Coefficient

Universal Music  AFC Ajax

Weak diversification

The 3 months correlation between Universal and AFC is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Universal Music Group and AFC Ajax NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFC Ajax NV 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 AFC Ajax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFC Ajax NV has no effect on the direction of Universal Music i.e., Universal Music and AFC Ajax go up and down completely randomly.

Pair Corralation between Universal Music and AFC Ajax

Assuming the 90 days trading horizon Universal Music Group is expected to generate 2.21 times more return on investment than AFC Ajax. However, Universal Music is 2.21 times more volatile than AFC Ajax NV. It trades about 0.01 of its potential returns per unit of risk. AFC Ajax NV is currently generating about -0.05 per unit of risk. If you would invest  2,413  in Universal Music Group on July 2, 2025 and sell it today you would earn a total of  22.00  from holding Universal Music Group or generate 0.91% 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.  AFC Ajax NV

Universal Music Group

Risk-Adjusted Performance

Weakest

Over the last 90 days Universal Music Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

AFC Ajax NV

Risk-Adjusted Performance

Weakest

Over the last 90 days AFC Ajax NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AFC Ajax is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Universal Music and AFC Ajax

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

The idea behind Universal Music Group and AFC Ajax NV 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.