Correlation Between MYR and Tencent Music

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

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

Diversification Opportunities for MYR and Tencent Music

-0.69

Correlation Coefficient

MYR  Tencent Music

Excellent diversification

The 3 months correlation between MYR and Tencent is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding MYR Group 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 MYR 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 MYR Group 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 MYR i.e., MYR and Tencent Music go up and down completely randomly.

Pair Corralation between MYR and Tencent Music

Given the investment horizon of 90 days MYR Group is expected to under-perform the Tencent Music. But the stock apears to be less risky and, when comparing its historical volatility, MYR Group is 1.12 times less risky than Tencent Music. The stock trades about -0.11 of its potential returns per unit of risk. The Tencent Music Entertainment is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,134  in Tencent Music Entertainment on December 28, 2024 and sell it today you would earn a total of  306.00  from holding Tencent Music Entertainment or generate 26.98% return on investment over 90 days.

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

MYR Group  vs.  Tencent Music Entertainment

MYR Group

Risk-Adjusted Performance

Very Weak

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

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 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, Tencent Music exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MYR and Tencent Music

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

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.