Correlation Between Nano Mobile and Tencent Music
Can any of the company-specific risk be diversified away by investing in both Nano Mobile 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 Nano Mobile and Tencent Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nano Mobile Healthcare and Tencent Music Entertainment, you can compare the effects of market volatilities on Nano Mobile 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 Nano Mobile with a short position of Tencent Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nano Mobile and Tencent Music.
Diversification Opportunities for Nano Mobile and Tencent Music
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nano and Tencent is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Nano Mobile Healthcare 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 Nano Mobile 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 Nano Mobile Healthcare 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 Nano Mobile i.e., Nano Mobile and Tencent Music go up and down completely randomly.
Pair Corralation between Nano Mobile and Tencent Music
Given the investment horizon of 90 days Nano Mobile Healthcare is expected to generate 7.71 times more return on investment than Tencent Music. However, Nano Mobile is 7.71 times more volatile than Tencent Music Entertainment. 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 0.04 in Nano Mobile Healthcare on September 2, 2024 and sell it today you would lose (0.02) from holding Nano Mobile Healthcare or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nano Mobile Healthcare vs. Tencent Music Entertainment
Performance |
| Timeline |
| Nano Mobile Healthcare |
| Tencent Music Entert |
Nano Mobile and Tencent Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nano Mobile and Tencent Music
The main advantage of trading using opposite Nano Mobile and Tencent Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nano Mobile 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.| Nano Mobile vs. HE Equipment Services | Nano Mobile vs. Fortress Transp Infra | Nano Mobile vs. 51Talk Online Education | Nano Mobile vs. Universal Technical Institute |
| 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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