Correlation Between Tencent Music and TriMas
Can any of the company-specific risk be diversified away by investing in both Tencent Music and TriMas 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 TriMas 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 TriMas, you can compare the effects of market volatilities on Tencent Music and TriMas 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 TriMas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Music and TriMas.
Diversification Opportunities for Tencent Music and TriMas
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tencent and TriMas is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Music Entertainment and TriMas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TriMas 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 TriMas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TriMas has no effect on the direction of Tencent Music i.e., Tencent Music and TriMas go up and down completely randomly.
Pair Corralation between Tencent Music and TriMas
Assuming the 90 days trading horizon Tencent Music Entertainment is expected to generate 1.81 times more return on investment than TriMas. However, Tencent Music is 1.81 times more volatile than TriMas. It trades about 0.04 of its potential returns per unit of risk. TriMas is currently generating about -0.02 per unit of risk. If you would invest 756.00 in Tencent Music Entertainment on October 9, 2024 and sell it today you would earn a total of 324.00 from holding Tencent Music Entertainment or generate 42.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tencent Music Entertainment vs. TriMas
Performance |
| Timeline |
| Tencent Music Entert |
| TriMas |
Tencent Music and TriMas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Music and TriMas
The main advantage of trading using opposite Tencent Music and TriMas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Music position performs unexpectedly, TriMas 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 TriMas will offset losses from the drop in TriMas' long position.| Tencent Music vs. Apple Inc | Tencent Music vs. Apple Inc | Tencent Music vs. Apple Inc | Tencent Music vs. Apple Inc |
| TriMas vs. OPERA SOFTWARE | TriMas vs. Firan Technology Group | TriMas vs. Guidewire Software | TriMas vs. Check Point Software |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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