Correlation Between Tencent Music and Vita Mobile
Can any of the company-specific risk be diversified away by investing in both Tencent Music and Vita Mobile 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 Vita Mobile 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 Vita Mobile Systems, you can compare the effects of market volatilities on Tencent Music and Vita Mobile 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 Vita Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Music and Vita Mobile.
Diversification Opportunities for Tencent Music and Vita Mobile
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tencent and Vita is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Music Entertainment and Vita Mobile Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vita Mobile Systems 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 Vita Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vita Mobile Systems has no effect on the direction of Tencent Music i.e., Tencent Music and Vita Mobile go up and down completely randomly.
Pair Corralation between Tencent Music and Vita Mobile
Considering the 90-day investment horizon Tencent Music is expected to generate 4.15 times less return on investment than Vita Mobile. But when comparing it to its historical volatility, Tencent Music Entertainment is 4.8 times less risky than Vita Mobile. It trades about 0.04 of its potential returns per unit of risk. Vita Mobile Systems is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 0.12 in Vita Mobile Systems on August 26, 2024 and sell it today you would lose (0.02) from holding Vita Mobile Systems or give up 16.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 9.26% |
| Values | Daily Returns |
Tencent Music Entertainment vs. Vita Mobile Systems
Performance |
| Timeline |
| Tencent Music Entert |
| Vita Mobile Systems |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Tencent Music and Vita Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Music and Vita Mobile
The main advantage of trading using opposite Tencent Music and Vita Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Music position performs unexpectedly, Vita Mobile 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 Vita Mobile will offset losses from the drop in Vita Mobile's long position.| Tencent Music vs. Trivago NV | Tencent Music vs. Cheetah Mobile | Tencent Music vs. Comscore | Tencent Music vs. Arena Group Holdings |
| Vita Mobile vs. DouYu International Holdings | Vita Mobile vs. Tencent Music Entertainment | Vita Mobile vs. Weibo Corp | Vita Mobile vs. PropertyGuru Group |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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