Correlation Between Sumitomo Mitsui and Tencent Holdings
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui 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 Sumitomo Mitsui and Tencent Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Mitsui Construction and Tencent Holdings Ltd, you can compare the effects of market volatilities on Sumitomo Mitsui 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 Sumitomo Mitsui with a short position of Tencent Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Tencent Holdings.
Diversification Opportunities for Sumitomo Mitsui and Tencent Holdings
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sumitomo and Tencent is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Construction and Tencent Holdings Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tencent Holdings and Sumitomo Mitsui 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 Sumitomo Mitsui Construction 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 Sumitomo Mitsui i.e., Sumitomo Mitsui and Tencent Holdings go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Tencent Holdings
If you would invest (100.00) in Tencent Holdings Ltd on August 26, 2024 and sell it today you would earn a total of 100.00 from holding Tencent Holdings Ltd or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 0.0% |
| Values | Daily Returns |
Sumitomo Mitsui Construction vs. Tencent Holdings Ltd
Performance |
| Timeline |
| Sumitomo Mitsui Cons |
| Tencent Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Sumitomo Mitsui and Tencent Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Tencent Holdings
The main advantage of trading using opposite Sumitomo Mitsui and Tencent Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui 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.| Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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