Correlation Between Tencent Music and Tinybeans Group
Can any of the company-specific risk be diversified away by investing in both Tencent Music and Tinybeans Group 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 Tinybeans Group 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 Tinybeans Group Limited, you can compare the effects of market volatilities on Tencent Music and Tinybeans Group 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 Tinybeans Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Music and Tinybeans Group.
Diversification Opportunities for Tencent Music and Tinybeans Group
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tencent and Tinybeans is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Music Entertainment and Tinybeans Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tinybeans Group 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 Tinybeans Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tinybeans Group has no effect on the direction of Tencent Music i.e., Tencent Music and Tinybeans Group go up and down completely randomly.
Pair Corralation between Tencent Music and Tinybeans Group
Considering the 90-day investment horizon Tencent Music Entertainment is expected to under-perform the Tinybeans Group. But the stock apears to be less risky and, when comparing its historical volatility, Tencent Music Entertainment is 10.98 times less risky than Tinybeans Group. The stock trades about -0.03 of its potential returns per unit of risk. The Tinybeans Group Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Tinybeans Group Limited on August 30, 2024 and sell it today you would lose (4.50) from holding Tinybeans Group Limited or give up 90.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tencent Music Entertainment vs. Tinybeans Group Limited
Performance |
| Timeline |
| Tencent Music Entert |
| Tinybeans Group |
Tencent Music and Tinybeans Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Music and Tinybeans Group
The main advantage of trading using opposite Tencent Music and Tinybeans Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Music position performs unexpectedly, Tinybeans Group 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 Tinybeans Group will offset losses from the drop in Tinybeans Group's long position.| Tencent Music vs. Baidu Inc | Tencent Music vs. Twilio Inc | Tencent Music vs. Spotify Technology SA | Tencent Music vs. Weibo Corp |
| Tinybeans Group vs. Meta Platforms | Tinybeans Group vs. Alphabet Inc Class C | Tinybeans Group vs. Twilio Inc | Tinybeans Group vs. Snap 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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