Correlation Between Delek Logistics and Tencent Music

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Can any of the company-specific risk be diversified away by investing in both Delek Logistics 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 Delek Logistics and Tencent Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delek Logistics Partners and Tencent Music Entertainment, you can compare the effects of market volatilities on Delek Logistics 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 Delek Logistics with a short position of Tencent Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek Logistics and Tencent Music.

Diversification Opportunities for Delek Logistics and Tencent Music

-0.03
  Correlation Coefficient

Good diversification

The 3 months correlation between Delek and Tencent is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Delek Logistics Partners 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 Delek Logistics 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 Delek Logistics Partners 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 Delek Logistics i.e., Delek Logistics and Tencent Music go up and down completely randomly.

Pair Corralation between Delek Logistics and Tencent Music

Considering the 90-day investment horizon Delek Logistics Partners is expected to under-perform the Tencent Music. But the stock apears to be less risky and, when comparing its historical volatility, Delek Logistics Partners is 2.14 times less risky than Tencent Music. The stock trades about -0.05 of its potential returns per unit of risk. The Tencent Music Entertainment is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  946.00  in Tencent Music Entertainment on September 18, 2024 and sell it today you would earn a total of  184.00  from holding Tencent Music Entertainment or generate 19.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Delek Logistics Partners  vs.  Tencent Music Entertainment

 Performance 
       Timeline  
Delek Logistics Partners 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Delek Logistics Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Delek Logistics is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.
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 weak primary indicators, Tencent Music exhibited solid returns over the last few months and may actually be approaching a breakup point.

Delek Logistics and Tencent Music Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Delek Logistics and Tencent Music

The main advantage of trading using opposite Delek Logistics and Tencent Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delek Logistics 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 Delek Logistics Partners 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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