Correlation Between Tencent Music and Ashtead Group
Can any of the company-specific risk be diversified away by investing in both Tencent Music and Ashtead Group 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 Tencent Music and Ashtead Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tencent Music Entertainment and Ashtead Group plc, you can compare the effects of market volatilities on Tencent Music and Ashtead Group 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 Tencent Music with a short position of Ashtead Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Music and Ashtead Group.
Diversification Opportunities for Tencent Music and Ashtead Group
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tencent and Ashtead is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Music Entertainment and Ashtead Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Group plc and Tencent 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 Tencent Music Entertainment are associated (or correlated) with Ashtead Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtead Group plc has no effect on the direction of Tencent Music i.e., Tencent Music and Ashtead Group go up and down completely randomly.
Pair Corralation between Tencent Music and Ashtead Group
Assuming the 90 days trading horizon Tencent Music Entertainment is expected to generate 1.76 times more return on investment than Ashtead Group. However, Tencent Music is 1.76 times more volatile than Ashtead Group plc. It trades about 0.18 of its potential returns per unit of risk. Ashtead Group plc is currently generating about 0.21 per unit of risk. If you would invest 1,030 in Tencent Music Entertainment on September 5, 2024 and sell it today you would earn a total of 130.00 from holding Tencent Music Entertainment or generate 12.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Tencent Music Entertainment vs. Ashtead Group plc
Performance |
| Timeline |
| Tencent Music Entert |
| Ashtead Group plc |
Tencent Music and Ashtead Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Music and Ashtead Group
The main advantage of trading using opposite Tencent Music and Ashtead Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Music position performs unexpectedly, Ashtead Group 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 Ashtead Group will offset losses from the drop in Ashtead Group's long position.| Tencent Music vs. Apple Inc | Tencent Music vs. Apple Inc | Tencent Music vs. Apple Inc | Tencent Music vs. Apple Inc |
| Ashtead Group vs. PARKEN Sport Entertainment | Ashtead Group vs. Tencent Music Entertainment | Ashtead Group vs. GEELY AUTOMOBILE | Ashtead Group vs. RCS MediaGroup SpA |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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