Correlation Between Valneva SE and Tencent Music
Can any of the company-specific risk be diversified away by investing in both Valneva SE 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 Valneva SE and Tencent Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valneva SE ADR and Tencent Music Entertainment, you can compare the effects of market volatilities on Valneva SE 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 Valneva SE with a short position of Tencent Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valneva SE and Tencent Music.
Diversification Opportunities for Valneva SE and Tencent Music
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Valneva and Tencent is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR 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 Valneva SE 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 Valneva SE ADR 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 Valneva SE i.e., Valneva SE and Tencent Music go up and down completely randomly.
Pair Corralation between Valneva SE and Tencent Music
Given the investment horizon of 90 days Valneva SE ADR is expected to under-perform the Tencent Music. In addition to that, Valneva SE is 1.08 times more volatile than Tencent Music Entertainment. It trades about -0.11 of its total potential returns per unit of risk. Tencent Music Entertainment is currently generating about 0.07 per unit of volatility. If you would invest 744.00 in Tencent Music Entertainment on September 1, 2024 and sell it today you would earn a total of 397.00 from holding Tencent Music Entertainment or generate 53.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valneva SE ADR vs. Tencent Music Entertainment
Performance |
| Timeline |
| Valneva SE ADR |
| Tencent Music Entert |
Valneva SE and Tencent Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valneva SE and Tencent Music
The main advantage of trading using opposite Valneva SE and Tencent Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valneva SE 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.| Valneva SE vs. NuCana PLC | Valneva SE vs. Sage Therapeutic | Valneva SE vs. Sellas Life Sciences | Valneva SE vs. Third Harmonic Bio |
| Tencent Music vs. Baidu Inc | Tencent Music vs. Twilio Inc | Tencent Music vs. Spotify Technology SA | Tencent Music vs. Weibo Corp |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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