Correlation Between Tencent Music and JAPAN AIRLINES
Can any of the company-specific risk be diversified away by investing in both Tencent Music and JAPAN AIRLINES 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 JAPAN AIRLINES 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 JAPAN AIRLINES, you can compare the effects of market volatilities on Tencent Music and JAPAN AIRLINES 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 JAPAN AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Music and JAPAN AIRLINES.
Diversification Opportunities for Tencent Music and JAPAN AIRLINES
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tencent and JAPAN is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Music Entertainment and JAPAN AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN AIRLINES 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 JAPAN AIRLINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN AIRLINES has no effect on the direction of Tencent Music i.e., Tencent Music and JAPAN AIRLINES go up and down completely randomly.
Pair Corralation between Tencent Music and JAPAN AIRLINES
Assuming the 90 days trading horizon Tencent Music Entertainment is expected to under-perform the JAPAN AIRLINES. In addition to that, Tencent Music is 1.3 times more volatile than JAPAN AIRLINES. It trades about -0.45 of its total potential returns per unit of risk. JAPAN AIRLINES is currently generating about -0.32 per unit of volatility. If you would invest 1,580 in JAPAN AIRLINES on October 19, 2024 and sell it today you would lose (100.00) from holding JAPAN AIRLINES or give up 6.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Tencent Music Entertainment vs. JAPAN AIRLINES
Performance |
| Timeline |
| Tencent Music Entert |
| JAPAN AIRLINES |
Tencent Music and JAPAN AIRLINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Music and JAPAN AIRLINES
The main advantage of trading using opposite Tencent Music and JAPAN AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Music position performs unexpectedly, JAPAN AIRLINES 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 JAPAN AIRLINES will offset losses from the drop in JAPAN AIRLINES's long position.| Tencent Music vs. NTG Nordic Transport | Tencent Music vs. COLUMBIA SPORTSWEAR | Tencent Music vs. ULTRA CLEAN HLDGS | Tencent Music vs. SCIENCE IN SPORT |
| JAPAN AIRLINES vs. Reinsurance Group of | JAPAN AIRLINES vs. UNIQA INSURANCE GR | JAPAN AIRLINES vs. AM EAGLE OUTFITTERS | JAPAN AIRLINES 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |