Correlation Between Tencent Music and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both Tencent Music and Nordic Semiconductor 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 Nordic Semiconductor 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 Nordic Semiconductor ASA, you can compare the effects of market volatilities on Tencent Music and Nordic Semiconductor 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 Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Music and Nordic Semiconductor.
Diversification Opportunities for Tencent Music and Nordic Semiconductor
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tencent and Nordic is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Music Entertainment and Nordic Semiconductor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Semiconductor ASA 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 Nordic Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Semiconductor ASA has no effect on the direction of Tencent Music i.e., Tencent Music and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between Tencent Music and Nordic Semiconductor
Assuming the 90 days trading horizon Tencent Music Entertainment is expected to generate 0.99 times more return on investment than Nordic Semiconductor. However, Tencent Music Entertainment is 1.01 times less risky than Nordic Semiconductor. It trades about 0.08 of its potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about -0.05 per unit of risk. If you would invest 845.00 in Tencent Music Entertainment on October 18, 2024 and sell it today you would earn a total of 155.00 from holding Tencent Music Entertainment or generate 18.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tencent Music Entertainment vs. Nordic Semiconductor ASA
Performance |
| Timeline |
| Tencent Music Entert |
| Nordic Semiconductor ASA |
Tencent Music and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Music and Nordic Semiconductor
The main advantage of trading using opposite Tencent Music and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Music position performs unexpectedly, Nordic Semiconductor 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 Nordic Semiconductor will offset losses from the drop in Nordic Semiconductor's long position.| Tencent Music vs. NIGHTINGALE HEALTH EO | Tencent Music vs. SOCKET MOBILE NEW | Tencent Music vs. T MOBILE US | Tencent Music vs. INTERSHOP Communications Aktiengesellschaft |
| Nordic Semiconductor vs. GALENA MINING LTD | Nordic Semiconductor vs. Endeavour Mining PLC | Nordic Semiconductor vs. MCEWEN MINING INC | Nordic Semiconductor vs. Hemisphere Energy Corp |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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