Correlation Between Tencent Music and Axcelis Technologies
Can any of the company-specific risk be diversified away by investing in both Tencent Music and Axcelis Technologies 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 Axcelis Technologies 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 Axcelis Technologies, you can compare the effects of market volatilities on Tencent Music and Axcelis Technologies 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 Axcelis Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Music and Axcelis Technologies.
Diversification Opportunities for Tencent Music and Axcelis Technologies
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tencent and Axcelis is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Music Entertainment and Axcelis Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axcelis Technologies 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 Axcelis Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axcelis Technologies has no effect on the direction of Tencent Music i.e., Tencent Music and Axcelis Technologies go up and down completely randomly.
Pair Corralation between Tencent Music and Axcelis Technologies
Assuming the 90 days trading horizon Tencent Music Entertainment is expected to under-perform the Axcelis Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Tencent Music Entertainment is 1.11 times less risky than Axcelis Technologies. The stock trades about -0.2 of its potential returns per unit of risk. The Axcelis Technologies is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 7,180 in Axcelis Technologies on October 14, 2024 and sell it today you would lose (462.00) from holding Axcelis Technologies or give up 6.43% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Tencent Music Entertainment vs. Axcelis Technologies
Performance |
Timeline |
Tencent Music Entert |
Axcelis Technologies |
Tencent Music and Axcelis Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tencent Music and Axcelis Technologies
The main advantage of trading using opposite Tencent Music and Axcelis Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Music position performs unexpectedly, Axcelis Technologies 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 Axcelis Technologies will offset losses from the drop in Axcelis Technologies' long position.Tencent Music vs. BJs Restaurants | Tencent Music vs. COSTCO WHOLESALE CDR | Tencent Music vs. MCEWEN MINING INC | Tencent Music vs. Harmony Gold Mining |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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