Correlation Between Tencent Music and GREENX METALS
Can any of the company-specific risk be diversified away by investing in both Tencent Music and GREENX METALS 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 GREENX METALS 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 GREENX METALS LTD, you can compare the effects of market volatilities on Tencent Music and GREENX METALS 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 GREENX METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Music and GREENX METALS.
Diversification Opportunities for Tencent Music and GREENX METALS
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tencent and GREENX is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Music Entertainment and GREENX METALS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GREENX METALS LTD 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 GREENX METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GREENX METALS LTD has no effect on the direction of Tencent Music i.e., Tencent Music and GREENX METALS go up and down completely randomly.
Pair Corralation between Tencent Music and GREENX METALS
Assuming the 90 days trading horizon Tencent Music is expected to generate 3.09 times less return on investment than GREENX METALS. But when comparing it to its historical volatility, Tencent Music Entertainment is 1.32 times less risky than GREENX METALS. It trades about 0.01 of its potential returns per unit of risk. GREENX METALS LTD is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 46.00 in GREENX METALS LTD on November 3, 2024 and sell it today you would earn a total of 1.00 from holding GREENX METALS LTD or generate 2.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tencent Music Entertainment vs. GREENX METALS LTD
Performance |
| Timeline |
| Tencent Music Entert |
| GREENX METALS LTD |
Tencent Music and GREENX METALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Music and GREENX METALS
The main advantage of trading using opposite Tencent Music and GREENX METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Music position performs unexpectedly, GREENX METALS 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 GREENX METALS will offset losses from the drop in GREENX METALS's long position.| Tencent Music vs. GRIFFIN MINING LTD | Tencent Music vs. DISTRICT METALS | Tencent Music vs. GREENX METALS LTD | Tencent Music vs. Stag Industrial |
| GREENX METALS vs. SLR Investment Corp | GREENX METALS vs. Apollo Investment Corp | GREENX METALS vs. Soken Chemical Engineering | GREENX METALS vs. MGIC INVESTMENT |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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