Correlation Between Tencent Music and Lifevantage
Can any of the company-specific risk be diversified away by investing in both Tencent Music and Lifevantage 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 Lifevantage 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 Lifevantage, you can compare the effects of market volatilities on Tencent Music and Lifevantage 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 Lifevantage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Music and Lifevantage.
Diversification Opportunities for Tencent Music and Lifevantage
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tencent and Lifevantage is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Music Entertainment and Lifevantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifevantage 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 Lifevantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifevantage has no effect on the direction of Tencent Music i.e., Tencent Music and Lifevantage go up and down completely randomly.
Pair Corralation between Tencent Music and Lifevantage
Considering the 90-day investment horizon Tencent Music is expected to generate 2.26 times less return on investment than Lifevantage. But when comparing it to its historical volatility, Tencent Music Entertainment is 1.26 times less risky than Lifevantage. It trades about 0.06 of its potential returns per unit of risk. Lifevantage is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 618.00 in Lifevantage on August 24, 2024 and sell it today you would earn a total of 775.00 from holding Lifevantage or generate 125.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tencent Music Entertainment vs. Lifevantage
Performance |
| Timeline |
| Tencent Music Entert |
| Lifevantage |
Tencent Music and Lifevantage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Music and Lifevantage
The main advantage of trading using opposite Tencent Music and Lifevantage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Music position performs unexpectedly, Lifevantage 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 Lifevantage will offset losses from the drop in Lifevantage's long position.| Tencent Music vs. Baidu Inc | Tencent Music vs. Twilio Inc | Tencent Music vs. Spotify Technology SA | Tencent Music vs. Weibo Corp |
| Lifevantage vs. Seneca Foods Corp | Lifevantage vs. Central Garden Pet | Lifevantage vs. Central Garden Pet | Lifevantage vs. Associated British Foods |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| CEOs Directory Screen CEOs from public companies around the world |