Correlation Between Townsquare Media and Hong Kong
Can any of the company-specific risk be diversified away by investing in both Townsquare Media and Hong Kong 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 Townsquare Media and Hong Kong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Townsquare Media and Hong Kong Exchanges, you can compare the effects of market volatilities on Townsquare Media and Hong Kong 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 Townsquare Media with a short position of Hong Kong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Townsquare Media and Hong Kong.
Diversification Opportunities for Townsquare Media and Hong Kong
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Townsquare and Hong is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Townsquare Media and Hong Kong Exchanges in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Kong Exchanges and Townsquare Media 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 Townsquare Media are associated (or correlated) with Hong Kong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Kong Exchanges has no effect on the direction of Townsquare Media i.e., Townsquare Media and Hong Kong go up and down completely randomly.
Pair Corralation between Townsquare Media and Hong Kong
Assuming the 90 days horizon Townsquare Media is expected to generate 0.82 times more return on investment than Hong Kong. However, Townsquare Media is 1.22 times less risky than Hong Kong. It trades about 0.08 of its potential returns per unit of risk. Hong Kong Exchanges is currently generating about 0.02 per unit of risk. If you would invest 930.00 in Townsquare Media on September 13, 2024 and sell it today you would earn a total of 35.00 from holding Townsquare Media or generate 3.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Townsquare Media vs. Hong Kong Exchanges
Performance |
| Timeline |
| Townsquare Media |
| Hong Kong Exchanges |
Townsquare Media and Hong Kong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Townsquare Media and Hong Kong
The main advantage of trading using opposite Townsquare Media and Hong Kong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Townsquare Media position performs unexpectedly, Hong Kong 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 Hong Kong will offset losses from the drop in Hong Kong's long position.| Townsquare Media vs. Austevoll Seafood ASA | Townsquare Media vs. Bausch Health Companies | Townsquare Media vs. Associated British Foods | Townsquare Media vs. SHIP HEALTHCARE HLDGINC |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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