Correlation Between AECOM TECHNOLOGY and Tencent Music
Can any of the company-specific risk be diversified away by investing in both AECOM TECHNOLOGY 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 AECOM TECHNOLOGY and Tencent Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AECOM TECHNOLOGY and Tencent Music Entertainment, you can compare the effects of market volatilities on AECOM TECHNOLOGY 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 AECOM TECHNOLOGY with a short position of Tencent Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of AECOM TECHNOLOGY and Tencent Music.
Diversification Opportunities for AECOM TECHNOLOGY and Tencent Music
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AECOM and Tencent is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding AECOM TECHNOLOGY 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 AECOM TECHNOLOGY 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 AECOM TECHNOLOGY 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 AECOM TECHNOLOGY i.e., AECOM TECHNOLOGY and Tencent Music go up and down completely randomly.
Pair Corralation between AECOM TECHNOLOGY and Tencent Music
Assuming the 90 days trading horizon AECOM TECHNOLOGY is expected to generate 0.94 times more return on investment than Tencent Music. However, AECOM TECHNOLOGY is 1.07 times less risky than Tencent Music. It trades about 0.22 of its potential returns per unit of risk. Tencent Music Entertainment is currently generating about 0.07 per unit of risk. If you would invest 9,900 in AECOM TECHNOLOGY on September 4, 2024 and sell it today you would earn a total of 1,100 from holding AECOM TECHNOLOGY or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
AECOM TECHNOLOGY vs. Tencent Music Entertainment
Performance |
| Timeline |
| AECOM TECHNOLOGY |
| Tencent Music Entert |
AECOM TECHNOLOGY and Tencent Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AECOM TECHNOLOGY and Tencent Music
The main advantage of trading using opposite AECOM TECHNOLOGY and Tencent Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AECOM TECHNOLOGY 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.| AECOM TECHNOLOGY vs. Pebblebrook Hotel Trust | AECOM TECHNOLOGY vs. DALATA HOTEL | AECOM TECHNOLOGY vs. STMicroelectronics NV | AECOM TECHNOLOGY vs. MIRAMAR HOTEL INV |
| Tencent Music vs. AECOM TECHNOLOGY | Tencent Music vs. DXC Technology Co | Tencent Music vs. ECHO INVESTMENT ZY | Tencent Music vs. New Residential Investment |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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