Correlation Between Trupanion and Tencent Music

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

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

Diversification Opportunities for Trupanion and Tencent Music

-0.41

Correlation Coefficient

Trupanion  Tencent Music

Very good diversification

The 3 months correlation between Trupanion and Tencent is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Trupanion 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 Trupanion 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 Trupanion 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 Trupanion i.e., Trupanion and Tencent Music go up and down completely randomly.

Pair Corralation between Trupanion and Tencent Music

Given the investment horizon of 90 days Trupanion is expected to generate 0.96 times more return on investment than Tencent Music. However, Trupanion is 1.04 times less risky than Tencent Music. It trades about -0.31 of its potential returns per unit of risk. Tencent Music Entertainment is currently generating about -0.36 per unit of risk. If you would invest  5,601  in Trupanion on October 10, 2024 and sell it today you would lose (854.00) from holding Trupanion or give up 15.25% of portfolio value over 90 days.

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

Trupanion  vs.  Tencent Music Entertainment

Trupanion

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Trupanion are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Trupanion is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

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 uncertain performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Trupanion and Tencent Music

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

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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 CEOs Directory module to screen CEOs from public companies around the world.