Correlation Between Tencent Music and FAST RETAIL
Can any of the company-specific risk be diversified away by investing in both Tencent Music and FAST RETAIL 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 FAST RETAIL 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 FAST RETAIL ADR, you can compare the effects of market volatilities on Tencent Music and FAST RETAIL 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 FAST RETAIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Music and FAST RETAIL.
Diversification Opportunities for Tencent Music and FAST RETAIL
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tencent and FAST is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Music Entertainment and FAST RETAIL ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAST RETAIL ADR 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 FAST RETAIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAST RETAIL ADR has no effect on the direction of Tencent Music i.e., Tencent Music and FAST RETAIL go up and down completely randomly.
Pair Corralation between Tencent Music and FAST RETAIL
Assuming the 90 days trading horizon Tencent Music is expected to generate 1.26 times less return on investment than FAST RETAIL. In addition to that, Tencent Music is 1.57 times more volatile than FAST RETAIL ADR. It trades about 0.03 of its total potential returns per unit of risk. FAST RETAIL ADR is currently generating about 0.06 per unit of volatility. If you would invest 1,732 in FAST RETAIL ADR on October 16, 2024 and sell it today you would earn a total of 1,208 from holding FAST RETAIL ADR or generate 69.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tencent Music Entertainment vs. FAST RETAIL ADR
Performance |
| Timeline |
| Tencent Music Entert |
| FAST RETAIL ADR |
Tencent Music and FAST RETAIL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Music and FAST RETAIL
The main advantage of trading using opposite Tencent Music and FAST RETAIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Music position performs unexpectedly, FAST RETAIL 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 FAST RETAIL will offset losses from the drop in FAST RETAIL'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 |
| FAST RETAIL vs. MUTUIONLINE | FAST RETAIL vs. Tencent Music Entertainment | FAST RETAIL vs. SCANSOURCE | FAST RETAIL vs. CODERE ONLINE LUX |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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