Correlation Between LIFEWAY FOODS and Tencent Music
Can any of the company-specific risk be diversified away by investing in both LIFEWAY FOODS 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 LIFEWAY FOODS and Tencent Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LIFEWAY FOODS and Tencent Music Entertainment, you can compare the effects of market volatilities on LIFEWAY FOODS 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 LIFEWAY FOODS with a short position of Tencent Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFEWAY FOODS and Tencent Music.
Diversification Opportunities for LIFEWAY FOODS and Tencent Music
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between LIFEWAY and Tencent is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding LIFEWAY FOODS 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 LIFEWAY FOODS 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 LIFEWAY FOODS 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 LIFEWAY FOODS i.e., LIFEWAY FOODS and Tencent Music go up and down completely randomly.
Pair Corralation between LIFEWAY FOODS and Tencent Music
Assuming the 90 days trading horizon LIFEWAY FOODS is expected to generate 1.33 times more return on investment than Tencent Music. However, LIFEWAY FOODS is 1.33 times more volatile than Tencent Music Entertainment. It trades about -0.07 of its potential returns per unit of risk. Tencent Music Entertainment is currently generating about -0.34 per unit of risk. If you would invest 2,200 in LIFEWAY FOODS on October 20, 2024 and sell it today you would lose (80.00) from holding LIFEWAY FOODS or give up 3.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LIFEWAY FOODS vs. Tencent Music Entertainment
Performance |
| Timeline |
| LIFEWAY FOODS |
| Tencent Music Entert |
LIFEWAY FOODS and Tencent Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIFEWAY FOODS and Tencent Music
The main advantage of trading using opposite LIFEWAY FOODS and Tencent Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFEWAY FOODS 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.| LIFEWAY FOODS vs. Apple Inc | LIFEWAY FOODS vs. Apple Inc | LIFEWAY FOODS vs. Apple Inc | LIFEWAY FOODS vs. Apple Inc |
| Tencent Music vs. EBRO FOODS | Tencent Music vs. LIFEWAY FOODS | Tencent Music vs. LPKF Laser Electronics | Tencent Music vs. Renesas Electronics |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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