Correlation Between Tencent Music and AM EAGLE
Can any of the company-specific risk be diversified away by investing in both Tencent Music and AM EAGLE 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 AM EAGLE 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 AM EAGLE OUTFITTERS, you can compare the effects of market volatilities on Tencent Music and AM EAGLE 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 AM EAGLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Music and AM EAGLE.
Diversification Opportunities for Tencent Music and AM EAGLE
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Tencent and AFG is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Music Entertainment and AM EAGLE OUTFITTERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AM EAGLE OUTFITTERS 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 AM EAGLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AM EAGLE OUTFITTERS has no effect on the direction of Tencent Music i.e., Tencent Music and AM EAGLE go up and down completely randomly.
Pair Corralation between Tencent Music and AM EAGLE
Assuming the 90 days trading horizon Tencent Music Entertainment is expected to generate 0.9 times more return on investment than AM EAGLE. However, Tencent Music Entertainment is 1.11 times less risky than AM EAGLE. It trades about -0.05 of its potential returns per unit of risk. AM EAGLE OUTFITTERS is currently generating about -0.08 per unit of risk. If you would invest 1,070 in Tencent Music Entertainment on October 17, 2024 and sell it today you would lose (70.00) from holding Tencent Music Entertainment or give up 6.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tencent Music Entertainment vs. AM EAGLE OUTFITTERS
Performance |
| Timeline |
| Tencent Music Entert |
| AM EAGLE OUTFITTERS |
Tencent Music and AM EAGLE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Music and AM EAGLE
The main advantage of trading using opposite Tencent Music and AM EAGLE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Music position performs unexpectedly, AM EAGLE 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 AM EAGLE will offset losses from the drop in AM EAGLE's long position.| Tencent Music vs. Silicon Motion Technology | Tencent Music vs. TRI CHEMICAL LABORATINC | Tencent Music vs. Carnegie Clean Energy | Tencent Music vs. CHEMICAL INDUSTRIES |
| AM EAGLE vs. Zoom Video Communications | AM EAGLE vs. Tencent Music Entertainment | AM EAGLE vs. UNIVERSAL MUSIC GROUP | AM EAGLE vs. Eidesvik Offshore ASA |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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