Correlation Between Tencent Music and HSBC Holdings
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By analyzing existing cross correlation between Tencent Music Entertainment and HSBC Holdings plc, you can compare the effects of market volatilities on Tencent Music and HSBC Holdings 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 HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Music and HSBC Holdings.
Diversification Opportunities for Tencent Music and HSBC Holdings
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tencent and HSBC is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Music Entertainment and HSBC Holdings plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC Holdings plc 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 HSBC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC Holdings plc has no effect on the direction of Tencent Music i.e., Tencent Music and HSBC Holdings go up and down completely randomly.
Pair Corralation between Tencent Music and HSBC Holdings
Assuming the 90 days trading horizon Tencent Music Entertainment is expected to generate 2.88 times more return on investment than HSBC Holdings. However, Tencent Music is 2.88 times more volatile than HSBC Holdings plc. It trades about 0.19 of its potential returns per unit of risk. HSBC Holdings plc is currently generating about 0.24 per unit of risk. If you would invest 1,030 in Tencent Music Entertainment on September 5, 2024 and sell it today you would earn a total of 130.00 from holding Tencent Music Entertainment or generate 12.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Tencent Music Entertainment vs. HSBC Holdings plc
Performance |
| Timeline |
| Tencent Music Entert |
| HSBC Holdings plc |
Tencent Music and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Music and HSBC Holdings
The main advantage of trading using opposite Tencent Music and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Music position performs unexpectedly, HSBC Holdings 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 HSBC Holdings will offset losses from the drop in HSBC Holdings' long position.| Tencent Music vs. Apple Inc | Tencent Music vs. Apple Inc | Tencent Music vs. Apple Inc | Tencent Music vs. Apple Inc |
| HSBC Holdings vs. Tencent Music Entertainment | HSBC Holdings vs. PARKEN Sport Entertainment | HSBC Holdings vs. SPORTING | HSBC Holdings vs. Townsquare Media |
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 CEOs Directory module to screen CEOs from public companies around the world.
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