Correlation Between Live Nation and Tencent Music
Can any of the company-specific risk be diversified away by investing in both Live Nation 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 Live Nation and Tencent Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Live Nation Entertainment and Tencent Music Entertainment, you can compare the effects of market volatilities on Live Nation 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 Live Nation with a short position of Tencent Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Nation and Tencent Music.
Diversification Opportunities for Live Nation and Tencent Music
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Live and Tencent is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment 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 Live Nation 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 Live Nation Entertainment 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 Live Nation i.e., Live Nation and Tencent Music go up and down completely randomly.
Pair Corralation between Live Nation and Tencent Music
Assuming the 90 days horizon Live Nation Entertainment is expected to generate 0.62 times more return on investment than Tencent Music. However, Live Nation Entertainment is 1.62 times less risky than Tencent Music. It trades about 0.07 of its potential returns per unit of risk. Tencent Music Entertainment is currently generating about 0.04 per unit of risk. If you would invest 7,015 in Live Nation Entertainment on August 27, 2024 and sell it today you would earn a total of 6,305 from holding Live Nation Entertainment or generate 89.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Live Nation Entertainment vs. Tencent Music Entertainment
Performance |
| Timeline |
| Live Nation Entertainment |
| Tencent Music Entert |
Live Nation and Tencent Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Nation and Tencent Music
The main advantage of trading using opposite Live Nation and Tencent Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation 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.| Live Nation vs. QINGCI GAMES INC | Live Nation vs. Air New Zealand | Live Nation vs. GameStop Corp | Live Nation vs. FUTURE GAMING GRP |
| Tencent Music vs. Salesforce | Tencent Music vs. SANOK RUBBER ZY | Tencent Music vs. EAGLE MATERIALS | Tencent Music vs. CarsalesCom |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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