Correlation Between Tencent Music and Nyxoah
Can any of the company-specific risk be diversified away by investing in both Tencent Music and Nyxoah 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 Nyxoah 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 Nyxoah, you can compare the effects of market volatilities on Tencent Music and Nyxoah 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 Nyxoah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Music and Nyxoah.
Diversification Opportunities for Tencent Music and Nyxoah
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tencent and Nyxoah is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Music Entertainment and Nyxoah in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nyxoah 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 Nyxoah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nyxoah has no effect on the direction of Tencent Music i.e., Tencent Music and Nyxoah go up and down completely randomly.
Pair Corralation between Tencent Music and Nyxoah
Considering the 90-day investment horizon Tencent Music Entertainment is expected to generate 1.07 times more return on investment than Nyxoah. However, Tencent Music is 1.07 times more volatile than Nyxoah. It trades about 0.06 of its potential returns per unit of risk. Nyxoah is currently generating about -0.24 per unit of risk. If you would invest 1,113 in Tencent Music Entertainment on September 1, 2024 and sell it today you would earn a total of 28.00 from holding Tencent Music Entertainment or generate 2.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tencent Music Entertainment vs. Nyxoah
Performance |
| Timeline |
| Tencent Music Entert |
| Nyxoah |
Tencent Music and Nyxoah Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Music and Nyxoah
The main advantage of trading using opposite Tencent Music and Nyxoah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Music position performs unexpectedly, Nyxoah 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 Nyxoah will offset losses from the drop in Nyxoah's long position.| Tencent Music vs. Baidu Inc | Tencent Music vs. Twilio Inc | Tencent Music vs. Spotify Technology SA | Tencent Music vs. Weibo Corp |
| Nyxoah vs. Milestone Scientific | Nyxoah vs. Pro Dex | Nyxoah vs. InfuSystems Holdings | Nyxoah vs. Repro Med Systems |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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