Correlation Between MOVIE GAMES and Tencent Music
Can any of the company-specific risk be diversified away by investing in both MOVIE GAMES and Tencent Music 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 MOVIE GAMES and Tencent Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MOVIE GAMES SA and Tencent Music Entertainment, you can compare the effects of market volatilities on MOVIE GAMES and Tencent Music 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 MOVIE GAMES with a short position of Tencent Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of MOVIE GAMES and Tencent Music.
Diversification Opportunities for MOVIE GAMES and Tencent Music
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MOVIE and Tencent is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding MOVIE GAMES SA and Tencent Music Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tencent Music Entert and MOVIE GAMES 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 MOVIE GAMES SA are associated (or correlated) with Tencent Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tencent Music Entert has no effect on the direction of MOVIE GAMES i.e., MOVIE GAMES and Tencent Music go up and down completely randomly.
Pair Corralation between MOVIE GAMES and Tencent Music
Assuming the 90 days horizon MOVIE GAMES SA is expected to under-perform the Tencent Music. But the stock apears to be less risky and, when comparing its historical volatility, MOVIE GAMES SA is 1.13 times less risky than Tencent Music. The stock trades about -0.14 of its potential returns per unit of risk. The Tencent Music Entertainment is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,080 in Tencent Music Entertainment on August 29, 2024 and sell it today you would earn a total of 20.00 from holding Tencent Music Entertainment or generate 1.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MOVIE GAMES SA vs. Tencent Music Entertainment
Performance |
| Timeline |
| MOVIE GAMES SA |
| Tencent Music Entert |
MOVIE GAMES and Tencent Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MOVIE GAMES and Tencent Music
The main advantage of trading using opposite MOVIE GAMES and Tencent Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MOVIE GAMES position performs unexpectedly, Tencent Music 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 Tencent Music will offset losses from the drop in Tencent Music's long position.| MOVIE GAMES vs. Merit Medical Systems | MOVIE GAMES vs. QURATE RETAIL INC | MOVIE GAMES vs. Microbot Medical | MOVIE GAMES vs. Ross Stores |
| Tencent Music vs. Apple Inc | Tencent Music vs. Apple Inc | Tencent Music vs. Apple Inc | Tencent Music vs. Apple Inc |
Check out your portfolio center.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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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