Correlation Between CONTAGIOUS GAMING and Tencent Music

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

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

Diversification Opportunities for CONTAGIOUS GAMING and Tencent Music

0.0

Correlation Coefficient

CONTAGIOUS GAMING  Tencent Music

Pay attention - limited upside

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

Pair Corralation between CONTAGIOUS GAMING and Tencent Music

Assuming the 90 days trading horizon CONTAGIOUS GAMING INC is expected to generate 39.56 times more return on investment than Tencent Music. However, CONTAGIOUS GAMING is 39.56 times more volatile than Tencent Music Entertainment. It trades about 0.2 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  0.35  in CONTAGIOUS GAMING INC on October 11, 2024 and sell it today you would lose (0.05) from holding CONTAGIOUS GAMING INC or give up 14.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

CONTAGIOUS GAMING INC  vs.  Tencent Music Entertainment

CONTAGIOUS GAMING INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONTAGIOUS GAMING INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CONTAGIOUS GAMING is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the 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 uncertain 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 CONTAGIOUS GAMING and Tencent Music

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

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 Transaction History module to view history of all your transactions and understand their impact on performance.