Correlation Between AIRBNB INC and Tencent Holdings
Can any of the company-specific risk be diversified away by investing in both AIRBNB INC and Tencent Holdings 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 AIRBNB INC and Tencent Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIRBNB INC DL 01 and Tencent Holdings, you can compare the effects of market volatilities on AIRBNB INC and Tencent Holdings 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 AIRBNB INC with a short position of Tencent Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIRBNB INC and Tencent Holdings.
Diversification Opportunities for AIRBNB INC and Tencent Holdings
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AIRBNB and Tencent is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding AIRBNB INC DL 01 and Tencent Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tencent Holdings and AIRBNB INC 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 AIRBNB INC DL 01 are associated (or correlated) with Tencent Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tencent Holdings has no effect on the direction of AIRBNB INC i.e., AIRBNB INC and Tencent Holdings go up and down completely randomly.
Pair Corralation between AIRBNB INC and Tencent Holdings
Assuming the 90 days horizon AIRBNB INC DL 01 is expected to generate 1.28 times more return on investment than Tencent Holdings. However, AIRBNB INC is 1.28 times more volatile than Tencent Holdings. It trades about 0.05 of its potential returns per unit of risk. Tencent Holdings is currently generating about 0.0 per unit of risk. If you would invest 12,754 in AIRBNB INC DL 01 on August 31, 2024 and sell it today you would earn a total of 308.00 from holding AIRBNB INC DL 01 or generate 2.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
AIRBNB INC DL 01 vs. Tencent Holdings
Performance |
| Timeline |
| AIRBNB INC DL |
| Tencent Holdings |
AIRBNB INC and Tencent Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIRBNB INC and Tencent Holdings
The main advantage of trading using opposite AIRBNB INC and Tencent Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIRBNB INC position performs unexpectedly, Tencent Holdings 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 Holdings will offset losses from the drop in Tencent Holdings' long position.| AIRBNB INC vs. Lifeway Foods | AIRBNB INC vs. MagnaChip Semiconductor Corp | AIRBNB INC vs. Magnachip Semiconductor | AIRBNB INC vs. ITALIAN WINE BRANDS |
| Tencent Holdings vs. BYD Company Limited | Tencent Holdings vs. Alibaba Group Holdings | Tencent Holdings vs. Xiaomi | Tencent Holdings vs. Baidu Inc |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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