Correlation Between Tencent Music and JD SPORTS
Can any of the company-specific risk be diversified away by investing in both Tencent Music and JD SPORTS 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 JD SPORTS 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 JD SPORTS FASH, you can compare the effects of market volatilities on Tencent Music and JD SPORTS 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 JD SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Music and JD SPORTS.
Diversification Opportunities for Tencent Music and JD SPORTS
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tencent and 9JD is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Music Entertainment and JD SPORTS FASH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD SPORTS FASH 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 JD SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD SPORTS FASH has no effect on the direction of Tencent Music i.e., Tencent Music and JD SPORTS go up and down completely randomly.
Pair Corralation between Tencent Music and JD SPORTS
Assuming the 90 days trading horizon Tencent Music Entertainment is expected to generate 0.56 times more return on investment than JD SPORTS. However, Tencent Music Entertainment is 1.78 times less risky than JD SPORTS. It trades about 0.07 of its potential returns per unit of risk. JD SPORTS FASH is currently generating about -0.16 per unit of risk. If you would invest 1,030 in Tencent Music Entertainment on September 3, 2024 and sell it today you would earn a total of 30.00 from holding Tencent Music Entertainment or generate 2.91% 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. JD SPORTS FASH
Performance |
| Timeline |
| Tencent Music Entert |
| JD SPORTS FASH |
Tencent Music and JD SPORTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Music and JD SPORTS
The main advantage of trading using opposite Tencent Music and JD SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Music position performs unexpectedly, JD SPORTS 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 JD SPORTS will offset losses from the drop in JD SPORTS's long position.| Tencent Music vs. Sumitomo Rubber Industries | Tencent Music vs. Hyster Yale Materials Handling | Tencent Music vs. Goodyear Tire Rubber | Tencent Music vs. GOODYEAR T RUBBER |
| JD SPORTS vs. FAST RETAILCOSPHDR 1 | JD SPORTS vs. FAST RETAIL ADR | JD SPORTS vs. Ross Stores | JD SPORTS vs. Genesco |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |