Correlation Between Tencent Music and ANZNZ

Can any of the company-specific risk be diversified away by investing in both Tencent Music and ANZNZ 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 ANZNZ 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 ANZNZ 125 22 JUN 26, you can compare the effects of market volatilities on Tencent Music and ANZNZ 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 ANZNZ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Music and ANZNZ.

Diversification Opportunities for Tencent Music and ANZNZ

-0.42

Correlation Coefficient

Tencent Music  ANZNZ

Very good diversification

The 3 months correlation between Tencent and ANZNZ is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Music Entertainment and ANZNZ 125 22 JUN 26 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANZNZ 125 22 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 ANZNZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANZNZ 125 22 has no effect on the direction of Tencent Music i.e., Tencent Music and ANZNZ go up and down completely randomly.

Pair Corralation between Tencent Music and ANZNZ

Considering the 90-day investment horizon Tencent Music Entertainment is expected to under-perform the ANZNZ. In addition to that, Tencent Music is 5.09 times more volatile than ANZNZ 125 22 JUN 26. It trades about -0.03 of its total potential returns per unit of risk. ANZNZ 125 22 JUN 26 is currently generating about 0.06 per unit of volatility. If you would invest  9,284  in ANZNZ 125 22 JUN 26 on September 30, 2024 and sell it today you would earn a total of  242.00  from holding ANZNZ 125 22 JUN 26 or generate 2.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	53.97%
Values	Daily Returns

Tencent Music Entertainment  vs.  ANZNZ 125 22 JUN 26

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. In spite of rather sound primary indicators, Tencent Music is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

ANZNZ 125 22

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ANZNZ 125 22 JUN 26 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ANZNZ is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tencent Music and ANZNZ

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

The idea behind Tencent Music Entertainment and ANZNZ 125 22 JUN 26 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.