Correlation Between Tencent Music and General Mills
Can any of the company-specific risk be diversified away by investing in both Tencent Music and General Mills 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 General Mills 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 General Mills, you can compare the effects of market volatilities on Tencent Music and General Mills 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 General Mills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Music and General Mills.
Diversification Opportunities for Tencent Music and General Mills
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Tencent and General is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Music Entertainment and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills 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 General Mills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Mills has no effect on the direction of Tencent Music i.e., Tencent Music and General Mills go up and down completely randomly.
Pair Corralation between Tencent Music and General Mills
Assuming the 90 days trading horizon Tencent Music Entertainment is expected to generate 2.91 times more return on investment than General Mills. However, Tencent Music is 2.91 times more volatile than General Mills. It trades about 0.01 of its potential returns per unit of risk. General Mills is currently generating about -0.05 per unit of risk. If you would invest 1,180 in Tencent Music Entertainment on November 7, 2024 and sell it today you would lose (30.00) from holding Tencent Music Entertainment or give up 2.54% 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. General Mills
Performance |
| Timeline |
| Tencent Music Entert |
| General Mills |
Tencent Music and General Mills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Music and General Mills
The main advantage of trading using opposite Tencent Music and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Music position performs unexpectedly, General Mills 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 General Mills will offset losses from the drop in General Mills' long position.| Tencent Music vs. SIVERS SEMICONDUCTORS AB | Tencent Music vs. NorAm Drilling AS | Tencent Music vs. Volkswagen AG | Tencent Music vs. Darden Restaurants |
| General Mills vs. Nestl SA | General Mills vs. Kraft Heinz Co | General Mills vs. General Mills | General Mills vs. Danone SA |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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