Correlation Between Tencent Music and Hyundai
Can any of the company-specific risk be diversified away by investing in both Tencent Music and Hyundai 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 Hyundai 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 Hyundai Motor, you can compare the effects of market volatilities on Tencent Music and Hyundai 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 Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Music and Hyundai.
Diversification Opportunities for Tencent Music and Hyundai
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tencent and Hyundai is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Music Entertainment and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor 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 Hyundai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Motor has no effect on the direction of Tencent Music i.e., Tencent Music and Hyundai go up and down completely randomly.
Pair Corralation between Tencent Music and Hyundai
Assuming the 90 days trading horizon Tencent Music Entertainment is expected to generate 1.8 times more return on investment than Hyundai. However, Tencent Music is 1.8 times more volatile than Hyundai Motor. It trades about 0.08 of its potential returns per unit of risk. Hyundai Motor is currently generating about -0.28 per unit of risk. If you would invest 1,070 in Tencent Music Entertainment on September 28, 2024 and sell it today you would earn a total of 50.00 from holding Tencent Music Entertainment or generate 4.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.0% |
| Values | Daily Returns |
Tencent Music Entertainment vs. Hyundai Motor
Performance |
| Timeline |
| Tencent Music Entert |
| Hyundai Motor |
Tencent Music and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Music and Hyundai
The main advantage of trading using opposite Tencent Music and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Music position performs unexpectedly, Hyundai 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 Hyundai will offset losses from the drop in Hyundai's long position.| Tencent Music vs. Apple Inc | Tencent Music vs. Apple Inc | Tencent Music vs. Apple Inc | Tencent Music vs. Apple Inc |
| Hyundai vs. BYD Company Limited | Hyundai vs. MERCEDES BENZ GRP ADR14 | Hyundai vs. VOLKSWAGEN ADR 110ON | Hyundai vs. Volkswagen AG |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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