Correlation Between G III and Tencent Music
Can any of the company-specific risk be diversified away by investing in both G III 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 G III and Tencent Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G III Apparel Group and Tencent Music Entertainment, you can compare the effects of market volatilities on G III 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 G III with a short position of Tencent Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of G III and Tencent Music.
Diversification Opportunities for G III and Tencent Music
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GI4 and Tencent is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group 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 G III 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 G III Apparel Group 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 G III i.e., G III and Tencent Music go up and down completely randomly.
Pair Corralation between G III and Tencent Music
Assuming the 90 days trading horizon G III Apparel Group is expected to generate 1.08 times more return on investment than Tencent Music. However, G III is 1.08 times more volatile than Tencent Music Entertainment. It trades about 0.1 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 2,380 in G III Apparel Group on November 2, 2024 and sell it today you would earn a total of 780.00 from holding G III Apparel Group or generate 32.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
G III Apparel Group vs. Tencent Music Entertainment
Performance |
| Timeline |
| G III Apparel |
| Tencent Music Entert |
G III and Tencent Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G III and Tencent Music
The main advantage of trading using opposite G III and Tencent Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G III 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.| G III vs. SILVER BULLET DATA | G III vs. Apollo Investment Corp | G III vs. Extra Space Storage | G III vs. TERADATA |
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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 Stocks Directory module to find actively traded stocks across global markets.
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