Correlation Between Tencent Music and Lindblad Expeditions

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Can any of the company-specific risk be diversified away by investing in both Tencent Music and Lindblad Expeditions 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 Lindblad Expeditions 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 Lindblad Expeditions Holdings, you can compare the effects of market volatilities on Tencent Music and Lindblad Expeditions 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 Lindblad Expeditions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Music and Lindblad Expeditions.

Diversification Opportunities for Tencent Music and Lindblad Expeditions

-0.06
  Correlation Coefficient

Good diversification

The 3 months correlation between Tencent and Lindblad is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Music Entertainment and Lindblad Expeditions Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindblad Expeditions 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 Lindblad Expeditions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindblad Expeditions has no effect on the direction of Tencent Music i.e., Tencent Music and Lindblad Expeditions go up and down completely randomly.

Pair Corralation between Tencent Music and Lindblad Expeditions

Considering the 90-day investment horizon Tencent Music is expected to generate 2.0 times less return on investment than Lindblad Expeditions. But when comparing it to its historical volatility, Tencent Music Entertainment is 1.21 times less risky than Lindblad Expeditions. It trades about 0.1 of its potential returns per unit of risk. Lindblad Expeditions Holdings is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  934.00  in Lindblad Expeditions Holdings on September 6, 2024 and sell it today you would earn a total of  435.00  from holding Lindblad Expeditions Holdings or generate 46.57% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Tencent Music Entertainment  vs.  Lindblad Expeditions Holdings

 Performance 
       Timeline  
Tencent Music Entert 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Tencent Music Entertainment are ranked lower than 7 (%) 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.
Lindblad Expeditions 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Lindblad Expeditions Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Lindblad Expeditions exhibited solid returns over the last few months and may actually be approaching a breakup point.

Tencent Music and Lindblad Expeditions Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tencent Music and Lindblad Expeditions

The main advantage of trading using opposite Tencent Music and Lindblad Expeditions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Music position performs unexpectedly, Lindblad Expeditions 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 Lindblad Expeditions will offset losses from the drop in Lindblad Expeditions' long position.
The idea behind Tencent Music Entertainment and Lindblad Expeditions Holdings 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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