Correlation Between Tencent Music and XTANT MEDICAL

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

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

Diversification Opportunities for Tencent Music and XTANT MEDICAL

0.15

Correlation Coefficient

Tencent Music  XTANT MEDICAL

Average diversification

The 3 months correlation between Tencent and XTANT is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Music Entertainment and XTANT MEDICAL HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XTANT MEDICAL HLDGS and Tencent Music 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 Tencent Music Entertainment are associated (or correlated) with XTANT MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XTANT MEDICAL HLDGS has no effect on the direction of Tencent Music i.e., Tencent Music and XTANT MEDICAL go up and down completely randomly.

Pair Corralation between Tencent Music and XTANT MEDICAL

Assuming the 90 days trading horizon Tencent Music is expected to generate 1.31 times less return on investment than XTANT MEDICAL. But when comparing it to its historical volatility, Tencent Music Entertainment is 1.56 times less risky than XTANT MEDICAL. It trades about 0.08 of its potential returns per unit of risk. XTANT MEDICAL HLDGS is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  34.00  in XTANT MEDICAL HLDGS on December 22, 2024 and sell it today you would earn a total of  5.00  from holding XTANT MEDICAL HLDGS or generate 14.71% return on investment over 90 days.

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

Tencent Music Entertainment  vs.  XTANT MEDICAL HLDGS

Tencent Music Entert

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tencent Music Entertainment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Tencent Music reported solid returns over the last few months and may actually be approaching a breakup point.

XTANT MEDICAL HLDGS

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in XTANT MEDICAL HLDGS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, XTANT MEDICAL reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tencent Music and XTANT MEDICAL

The main advantage of trading using opposite Tencent Music and XTANT MEDICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Music position performs unexpectedly, XTANT MEDICAL 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 XTANT MEDICAL will offset losses from the drop in XTANT MEDICAL's long position.

The idea behind Tencent Music Entertainment and XTANT MEDICAL HLDGS 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..