Correlation Between Uber Technologies and Tencent Music
Can any of the company-specific risk be diversified away by investing in both Uber Technologies and Tencent Music 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 Uber Technologies and Tencent Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uber Technologies and Tencent Music Entertainment, you can compare the effects of market volatilities on Uber Technologies and Tencent Music 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 Uber Technologies with a short position of Tencent Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uber Technologies and Tencent Music.
Diversification Opportunities for Uber Technologies and Tencent Music
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Uber and Tencent is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies and Tencent Music Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tencent Music Entert and Uber Technologies 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 Uber Technologies are associated (or correlated) with Tencent Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tencent Music Entert has no effect on the direction of Uber Technologies i.e., Uber Technologies and Tencent Music go up and down completely randomly.
Pair Corralation between Uber Technologies and Tencent Music
Assuming the 90 days trading horizon Uber Technologies is expected to generate 0.78 times more return on investment than Tencent Music. However, Uber Technologies is 1.29 times less risky than Tencent Music. It trades about 0.09 of its potential returns per unit of risk. Tencent Music Entertainment is currently generating about 0.05 per unit of risk. If you would invest 2,300 in Uber Technologies on September 12, 2024 and sell it today you would earn a total of 3,899 from holding Uber Technologies or generate 169.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Uber Technologies vs. Tencent Music Entertainment
Performance |
| Timeline |
| Uber Technologies |
| Tencent Music Entert |
Uber Technologies and Tencent Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Uber Technologies and Tencent Music
The main advantage of trading using opposite Uber Technologies and Tencent Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uber Technologies position performs unexpectedly, Tencent Music 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 Tencent Music will offset losses from the drop in Tencent Music's long position.| Uber Technologies vs. Apple Inc | Uber Technologies vs. Apple Inc | Uber Technologies vs. Apple Inc | Uber Technologies vs. Apple Inc |
| Tencent Music vs. Apple Inc | Tencent Music vs. Apple Inc | Tencent Music vs. Apple Inc | Tencent Music vs. Apple 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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