Correlation Between Tencent Music and AMAZON
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By analyzing existing cross correlation between Tencent Music Entertainment and AMAZON INC 425, you can compare the effects of market volatilities on Tencent Music and AMAZON 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 AMAZON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Music and AMAZON.
Diversification Opportunities for Tencent Music and AMAZON
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tencent and AMAZON is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Music Entertainment and AMAZON INC 425 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMAZON INC 425 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 AMAZON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMAZON INC 425 has no effect on the direction of Tencent Music i.e., Tencent Music and AMAZON go up and down completely randomly.
Pair Corralation between Tencent Music and AMAZON
Considering the 90-day investment horizon Tencent Music is expected to generate 3.41 times less return on investment than AMAZON. In addition to that, Tencent Music is 1.38 times more volatile than AMAZON INC 425. It trades about 0.06 of its total potential returns per unit of risk. AMAZON INC 425 is currently generating about 0.28 per unit of volatility. If you would invest 8,423 in AMAZON INC 425 on September 2, 2024 and sell it today you would earn a total of 951.00 from holding AMAZON INC 425 or generate 11.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tencent Music Entertainment vs. AMAZON INC 425
Performance |
| Timeline |
| Tencent Music Entert |
| AMAZON INC 425 |
Tencent Music and AMAZON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Music and AMAZON
The main advantage of trading using opposite Tencent Music and AMAZON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Music position performs unexpectedly, AMAZON 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 AMAZON will offset losses from the drop in AMAZON's long position.| Tencent Music vs. Baidu Inc | Tencent Music vs. Twilio Inc | Tencent Music vs. Spotify Technology SA | Tencent Music vs. Weibo Corp |
| AMAZON vs. Topbuild Corp | AMAZON vs. Mills Music Trust | AMAZON vs. Tencent Music Entertainment | AMAZON vs. Royalty Management Holding |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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