Correlation Between Tencent Music and Origin Materials
Can any of the company-specific risk be diversified away by investing in both Tencent Music and Origin Materials 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 Origin Materials 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 Origin Materials, you can compare the effects of market volatilities on Tencent Music and Origin Materials 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 Origin Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Music and Origin Materials.
Diversification Opportunities for Tencent Music and Origin Materials
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tencent and Origin is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Music Entertainment and Origin Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Materials 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 Origin Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Materials has no effect on the direction of Tencent Music i.e., Tencent Music and Origin Materials go up and down completely randomly.
Pair Corralation between Tencent Music and Origin Materials
Considering the 90-day investment horizon Tencent Music Entertainment is expected to generate 0.59 times more return on investment than Origin Materials. However, Tencent Music Entertainment is 1.69 times less risky than Origin Materials. It trades about 0.14 of its potential returns per unit of risk. Origin Materials is currently generating about -0.02 per unit of risk. If you would invest 1,126 in Tencent Music Entertainment on September 4, 2024 and sell it today you would earn a total of 93.00 from holding Tencent Music Entertainment or generate 8.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Tencent Music Entertainment vs. Origin Materials
Performance |
| Timeline |
| Tencent Music Entert |
| Origin Materials |
Tencent Music and Origin Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Music and Origin Materials
The main advantage of trading using opposite Tencent Music and Origin Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Music position performs unexpectedly, Origin Materials 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 Origin Materials will offset losses from the drop in Origin Materials' long position.| Tencent Music vs. Baidu Inc | Tencent Music vs. Twilio Inc | Tencent Music vs. Spotify Technology SA | Tencent Music vs. Weibo Corp |
| Origin Materials vs. Tronox Holdings PLC | Origin Materials vs. Valhi Inc | Origin Materials vs. Lsb Industries | Origin Materials vs. Huntsman |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |