Correlation Between Tencent Music and Pinterest
Can any of the company-specific risk be diversified away by investing in both Tencent Music and Pinterest 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 Pinterest 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 Pinterest, you can compare the effects of market volatilities on Tencent Music and Pinterest 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 Pinterest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Music and Pinterest.
Diversification Opportunities for Tencent Music and Pinterest
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tencent and Pinterest is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Music Entertainment and Pinterest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinterest 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 Pinterest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinterest has no effect on the direction of Tencent Music i.e., Tencent Music and Pinterest go up and down completely randomly.
Pair Corralation between Tencent Music and Pinterest
Considering the 90-day investment horizon Tencent Music Entertainment is expected to generate 0.97 times more return on investment than Pinterest. However, Tencent Music Entertainment is 1.03 times less risky than Pinterest. It trades about 0.1 of its potential returns per unit of risk. Pinterest is currently generating about 0.03 per unit of risk. If you would invest 1,177 in Tencent Music Entertainment on March 20, 2025 and sell it today you would earn a total of 668.50 from holding Tencent Music Entertainment or generate 56.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tencent Music Entertainment vs. Pinterest
Performance |
| Timeline |
| Tencent Music Entert |
Tencent Music and Pinterest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Music and Pinterest
The main advantage of trading using opposite Tencent Music and Pinterest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Music position performs unexpectedly, Pinterest 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 Pinterest will offset losses from the drop in Pinterest's long position.| Tencent Music vs. Baidu Inc | Tencent Music vs. Twilio Inc | Tencent Music vs. Spotify Technology SA | Tencent Music vs. Weibo Corp |
| Pinterest vs. Perion Network | Pinterest vs. Taboola Ltd Warrant | Pinterest vs. Fiverr International | Pinterest vs. ANGI Homeservices |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |