Correlation Between YY and Tencent Music
Can any of the company-specific risk be diversified away by investing in both YY 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 YY and Tencent Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between YY Inc Class and Tencent Music Entertainment, you can compare the effects of market volatilities on YY 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 YY with a short position of Tencent Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of YY and Tencent Music.
Diversification Opportunities for YY and Tencent Music
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between YY and Tencent is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding YY Inc Class 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 YY 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 YY Inc Class 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 YY i.e., YY and Tencent Music go up and down completely randomly.
Pair Corralation between YY and Tencent Music
Allowing for the 90-day total investment horizon YY Inc Class is expected to generate 0.91 times more return on investment than Tencent Music. However, YY Inc Class is 1.1 times less risky than Tencent Music. It trades about 0.01 of its potential returns per unit of risk. Tencent Music Entertainment is currently generating about -0.04 per unit of risk. If you would invest 3,400 in YY Inc Class on August 27, 2024 and sell it today you would lose (9.00) from holding YY Inc Class or give up 0.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
YY Inc Class vs. Tencent Music Entertainment
Performance |
| Timeline |
| YY Inc Class |
| Tencent Music Entert |
YY and Tencent Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YY and Tencent Music
The main advantage of trading using opposite YY and Tencent Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YY 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.| YY vs. Weibo Corp | YY vs. DouYu International Holdings | YY vs. Tencent Music Entertainment | YY vs. Autohome |
| Tencent Music vs. Trivago NV | Tencent Music vs. Cheetah Mobile | Tencent Music vs. Comscore | Tencent Music vs. Arena Group Holdings |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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