Correlation Between Tencent Music and ANGANG STEEL
Can any of the company-specific risk be diversified away by investing in both Tencent Music and ANGANG STEEL 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 ANGANG STEEL 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 ANGANG STEEL H , you can compare the effects of market volatilities on Tencent Music and ANGANG STEEL 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 ANGANG STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Music and ANGANG STEEL.
Diversification Opportunities for Tencent Music and ANGANG STEEL
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Tencent and ANGANG is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Music Entertainment and ANGANG STEEL H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANGANG STEEL H 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 ANGANG STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANGANG STEEL H has no effect on the direction of Tencent Music i.e., Tencent Music and ANGANG STEEL go up and down completely randomly.
Pair Corralation between Tencent Music and ANGANG STEEL
Assuming the 90 days trading horizon Tencent Music Entertainment is expected to generate 0.83 times more return on investment than ANGANG STEEL. However, Tencent Music Entertainment is 1.21 times less risky than ANGANG STEEL. It trades about -0.23 of its potential returns per unit of risk. ANGANG STEEL H is currently generating about -0.23 per unit of risk. If you would invest 1,150 in Tencent Music Entertainment on October 13, 2024 and sell it today you would lose (100.00) from holding Tencent Music Entertainment or give up 8.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tencent Music Entertainment vs. ANGANG STEEL H
Performance |
| Timeline |
| Tencent Music Entert |
| ANGANG STEEL H |
Tencent Music and ANGANG STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Music and ANGANG STEEL
The main advantage of trading using opposite Tencent Music and ANGANG STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Music position performs unexpectedly, ANGANG STEEL 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 ANGANG STEEL will offset losses from the drop in ANGANG STEEL's long position.| Tencent Music vs. Apple Inc | Tencent Music vs. Apple Inc | Tencent Music vs. Apple Inc | Tencent Music vs. Apple Inc |
| ANGANG STEEL vs. Federal Agricultural Mortgage | ANGANG STEEL vs. Hanison Construction Holdings | ANGANG STEEL vs. Sterling Construction | ANGANG STEEL vs. Tencent Music Entertainment |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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