Correlation Between PropertyGuru and Tencent Music
Can any of the company-specific risk be diversified away by investing in both PropertyGuru 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 PropertyGuru and Tencent Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PropertyGuru Group and Tencent Music Entertainment, you can compare the effects of market volatilities on PropertyGuru 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 PropertyGuru with a short position of Tencent Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of PropertyGuru and Tencent Music.
Diversification Opportunities for PropertyGuru and Tencent Music
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PropertyGuru and Tencent is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding PropertyGuru 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 PropertyGuru 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 PropertyGuru 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 PropertyGuru i.e., PropertyGuru and Tencent Music go up and down completely randomly.
Pair Corralation between PropertyGuru and Tencent Music
Given the investment horizon of 90 days PropertyGuru is expected to generate 1.05 times less return on investment than Tencent Music. But when comparing it to its historical volatility, PropertyGuru Group is 1.16 times less risky than Tencent Music. It trades about 0.04 of its potential returns per unit of risk. Tencent Music Entertainment is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 818.00 in Tencent Music Entertainment on August 27, 2024 and sell it today you would earn a total of 301.00 from holding Tencent Music Entertainment or generate 36.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PropertyGuru Group vs. Tencent Music Entertainment
Performance |
| Timeline |
| PropertyGuru Group |
| Tencent Music Entert |
PropertyGuru and Tencent Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PropertyGuru and Tencent Music
The main advantage of trading using opposite PropertyGuru and Tencent Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PropertyGuru 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.| PropertyGuru vs. Comscore | PropertyGuru vs. Cheetah Mobile | PropertyGuru vs. EverQuote Class A | PropertyGuru vs. DouYu International Holdings |
| Tencent Music vs. Trivago NV | Tencent Music vs. Cheetah Mobile | Tencent Music vs. Comscore | Tencent Music vs. Arena Group Holdings |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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