Correlation Between Christian Dior and Tencent Music
Can any of the company-specific risk be diversified away by investing in both Christian Dior and Tencent Music 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 Christian Dior and Tencent Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Christian Dior SE and Tencent Music Entertainment, you can compare the effects of market volatilities on Christian Dior and Tencent Music 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 Christian Dior with a short position of Tencent Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Christian Dior and Tencent Music.
Diversification Opportunities for Christian Dior and Tencent Music
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Christian and Tencent is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Christian Dior SE and Tencent Music Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tencent Music Entert and Christian Dior 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 Christian Dior SE are associated (or correlated) with Tencent Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tencent Music Entert has no effect on the direction of Christian Dior i.e., Christian Dior and Tencent Music go up and down completely randomly.
Pair Corralation between Christian Dior and Tencent Music
Assuming the 90 days horizon Christian Dior SE is expected to generate 0.68 times more return on investment than Tencent Music. However, Christian Dior SE is 1.47 times less risky than Tencent Music. It trades about 0.02 of its potential returns per unit of risk. Tencent Music Entertainment is currently generating about -0.2 per unit of risk. If you would invest 59,650 in Christian Dior SE on October 14, 2024 and sell it today you would earn a total of 150.00 from holding Christian Dior SE or generate 0.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Christian Dior SE vs. Tencent Music Entertainment
Performance |
| Timeline |
| Christian Dior SE |
| Tencent Music Entert |
Christian Dior and Tencent Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Christian Dior and Tencent Music
The main advantage of trading using opposite Christian Dior and Tencent Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Christian Dior position performs unexpectedly, Tencent Music 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 Tencent Music will offset losses from the drop in Tencent Music's long position.| Christian Dior vs. Tencent Music Entertainment | Christian Dior vs. Globex Mining Enterprises | Christian Dior vs. RCS MediaGroup SpA | Christian Dior vs. MCEWEN MINING INC |
| Tencent Music vs. Boyd Gaming | Tencent Music vs. Grand Canyon Education | Tencent Music vs. Penn National Gaming | Tencent Music vs. DEVRY EDUCATION GRP |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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