Correlation Between Tencent Music and Eastman Kodak
Can any of the company-specific risk be diversified away by investing in both Tencent Music and Eastman Kodak 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 Tencent Music and Eastman Kodak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tencent Music Entertainment and Eastman Kodak Co, you can compare the effects of market volatilities on Tencent Music and Eastman Kodak 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 Tencent Music with a short position of Eastman Kodak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Music and Eastman Kodak.
Diversification Opportunities for Tencent Music and Eastman Kodak
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Tencent and Eastman is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Music Entertainment and Eastman Kodak Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Kodak and Tencent Music 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 Tencent Music Entertainment are associated (or correlated) with Eastman Kodak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Kodak has no effect on the direction of Tencent Music i.e., Tencent Music and Eastman Kodak go up and down completely randomly.
Pair Corralation between Tencent Music and Eastman Kodak
Considering the 90-day investment horizon Tencent Music Entertainment is expected to generate 0.7 times more return on investment than Eastman Kodak. However, Tencent Music Entertainment is 1.43 times less risky than Eastman Kodak. It trades about 0.07 of its potential returns per unit of risk. Eastman Kodak Co is currently generating about 0.03 per unit of risk. If you would invest 674.00 in Tencent Music Entertainment on September 12, 2024 and sell it today you would earn a total of 576.00 from holding Tencent Music Entertainment or generate 85.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tencent Music Entertainment vs. Eastman Kodak Co
Performance |
| Timeline |
| Tencent Music Entert |
| Eastman Kodak |
Tencent Music and Eastman Kodak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Music and Eastman Kodak
The main advantage of trading using opposite Tencent Music and Eastman Kodak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Music position performs unexpectedly, Eastman Kodak 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 Eastman Kodak will offset losses from the drop in Eastman Kodak's long position.| Tencent Music vs. Baidu Inc | Tencent Music vs. Twilio Inc | Tencent Music vs. Spotify Technology SA | Tencent Music vs. Weibo Corp |
| Eastman Kodak vs. SMX Public Limited | Eastman Kodak vs. System1 | Eastman Kodak vs. Lichen China Limited | Eastman Kodak vs. Team Inc |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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