Correlation Between Impinj and Tencent Music

Can any of the company-specific risk be diversified away by investing in both Impinj 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 Impinj and Tencent Music into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Impinj Inc and Tencent Music Entertainment, you can compare the effects of market volatilities on Impinj 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 Impinj with a short position of Tencent Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Impinj and Tencent Music.

Diversification Opportunities for Impinj and Tencent Music

0.0

Correlation Coefficient

Impinj  Tencent Music

Pay attention - limited upside

The 3 months correlation between Impinj and Tencent is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Impinj Inc 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 Impinj 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 Impinj Inc 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 Impinj i.e., Impinj and Tencent Music go up and down completely randomly.

Pair Corralation between Impinj and Tencent Music

Assuming the 90 days horizon Impinj Inc is expected to generate 1.43 times more return on investment than Tencent Music. However, Impinj is 1.43 times more volatile than Tencent Music Entertainment. It trades about -0.04 of its potential returns per unit of risk. Tencent Music Entertainment is currently generating about -0.15 per unit of risk. If you would invest  14,940  in Impinj Inc on October 12, 2024 and sell it today you would lose (485.00) from holding Impinj Inc or give up 3.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Impinj Inc  vs.  Tencent Music Entertainment

Impinj Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Impinj Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Tencent Music Entert

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tencent Music Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Impinj and Tencent Music

The main advantage of trading using opposite Impinj and Tencent Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Impinj 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.

The idea behind Impinj Inc and Tencent Music Entertainment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.