Correlation Between Tencent Music and Elite Education
Can any of the company-specific risk be diversified away by investing in both Tencent Music and Elite Education 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 Elite Education 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 Elite Education Group, you can compare the effects of market volatilities on Tencent Music and Elite Education 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 Elite Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Music and Elite Education.
Diversification Opportunities for Tencent Music and Elite Education
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Tencent and Elite is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Music Entertainment and Elite Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elite Education Group 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 Elite Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elite Education Group has no effect on the direction of Tencent Music i.e., Tencent Music and Elite Education go up and down completely randomly.
Pair Corralation between Tencent Music and Elite Education
Considering the 90-day investment horizon Tencent Music is expected to generate 2.22 times less return on investment than Elite Education. But when comparing it to its historical volatility, Tencent Music Entertainment is 8.22 times less risky than Elite Education. It trades about 0.22 of its potential returns per unit of risk. Elite Education Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 54.00 in Elite Education Group on June 11, 2025 and sell it today you would lose (3.00) from holding Elite Education Group or give up 5.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tencent Music Entertainment vs. Elite Education Group
Performance |
| Timeline |
| Tencent Music Entert |
| Elite Education Group |
Tencent Music and Elite Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Music and Elite Education
The main advantage of trading using opposite Tencent Music and Elite Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Music position performs unexpectedly, Elite Education 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 Elite Education will offset losses from the drop in Elite Education's long position.| Tencent Music vs. Baidu Inc | Tencent Music vs. DouYu International Holdings | Tencent Music vs. HUYA Inc | Tencent Music vs. iQIYI Inc |
| Elite Education vs. QuantaSing Group Limited | Elite Education vs. Golden Sun Education | Elite Education vs. Genius Group | Elite Education vs. Wah Fu Education |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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