Correlation Between Tencent Music and GBS Software
Can any of the company-specific risk be diversified away by investing in both Tencent Music and GBS Software 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 GBS Software 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 GBS Software AG, you can compare the effects of market volatilities on Tencent Music and GBS Software 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 GBS Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Music and GBS Software.
Diversification Opportunities for Tencent Music and GBS Software
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Tencent and GBS is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Music Entertainment and GBS Software AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GBS Software AG 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 GBS Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GBS Software AG has no effect on the direction of Tencent Music i.e., Tencent Music and GBS Software go up and down completely randomly.
Pair Corralation between Tencent Music and GBS Software
Assuming the 90 days trading horizon Tencent Music Entertainment is expected to under-perform the GBS Software. In addition to that, Tencent Music is 1.52 times more volatile than GBS Software AG. It trades about -0.01 of its total potential returns per unit of risk. GBS Software AG is currently generating about 0.25 per unit of volatility. If you would invest 250.00 in GBS Software AG on October 11, 2024 and sell it today you would earn a total of 54.00 from holding GBS Software AG or generate 21.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.44% |
| Values | Daily Returns |
Tencent Music Entertainment vs. GBS Software AG
Performance |
| Timeline |
| Tencent Music Entert |
| GBS Software AG |
Tencent Music and GBS Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Music and GBS Software
The main advantage of trading using opposite Tencent Music and GBS Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Music position performs unexpectedly, GBS Software 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 GBS Software will offset losses from the drop in GBS Software's long position.| Tencent Music vs. GALENA MINING LTD | Tencent Music vs. Yuexiu Transport Infrastructure | Tencent Music vs. GREENX METALS LTD | Tencent Music vs. ADRIATIC METALS LS 013355 |
| GBS Software vs. Tencent Music Entertainment | GBS Software vs. GigaMedia | GBS Software vs. MEDICAL FACILITIES NEW | GBS Software vs. AVITA Medical |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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