Correlation Between EAGLE MATERIALS and Tencent Music
Can any of the company-specific risk be diversified away by investing in both EAGLE MATERIALS 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 EAGLE MATERIALS and Tencent Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EAGLE MATERIALS and Tencent Music Entertainment, you can compare the effects of market volatilities on EAGLE MATERIALS 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 EAGLE MATERIALS with a short position of Tencent Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAGLE MATERIALS and Tencent Music.
Diversification Opportunities for EAGLE MATERIALS and Tencent Music
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EAGLE and Tencent is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS 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 EAGLE MATERIALS 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 EAGLE MATERIALS 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 EAGLE MATERIALS i.e., EAGLE MATERIALS and Tencent Music go up and down completely randomly.
Pair Corralation between EAGLE MATERIALS and Tencent Music
Assuming the 90 days trading horizon EAGLE MATERIALS is expected to generate 0.63 times more return on investment than Tencent Music. However, EAGLE MATERIALS is 1.58 times less risky than Tencent Music. It trades about 0.18 of its potential returns per unit of risk. Tencent Music Entertainment is currently generating about 0.09 per unit of risk. If you would invest 23,177 in EAGLE MATERIALS on August 31, 2024 and sell it today you would earn a total of 5,823 from holding EAGLE MATERIALS or generate 25.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EAGLE MATERIALS vs. Tencent Music Entertainment
Performance |
| Timeline |
| EAGLE MATERIALS |
| Tencent Music Entert |
EAGLE MATERIALS and Tencent Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EAGLE MATERIALS and Tencent Music
The main advantage of trading using opposite EAGLE MATERIALS and Tencent Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAGLE MATERIALS 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.| EAGLE MATERIALS vs. Burlington Stores | EAGLE MATERIALS vs. Ameriprise Financial | EAGLE MATERIALS vs. BJs Wholesale Club | EAGLE MATERIALS vs. National Retail Properties |
| Tencent Music vs. Entravision Communications | Tencent Music vs. DOCDATA | Tencent Music vs. MICRONIC MYDATA | Tencent Music vs. Ribbon Communications |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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