Correlation Between Fiverr International and Tencent Holdings
Can any of the company-specific risk be diversified away by investing in both Fiverr International 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 Fiverr International and Tencent Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fiverr International and Tencent Holdings Ltd, you can compare the effects of market volatilities on Fiverr International 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 Fiverr International with a short position of Tencent Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fiverr International and Tencent Holdings.
Diversification Opportunities for Fiverr International and Tencent Holdings
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fiverr and Tencent is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Fiverr International and Tencent Holdings Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tencent Holdings and Fiverr International 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 Fiverr International 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 Fiverr International i.e., Fiverr International and Tencent Holdings go up and down completely randomly.
Pair Corralation between Fiverr International and Tencent Holdings
Given the investment horizon of 90 days Fiverr International is expected to generate 1.22 times more return on investment than Tencent Holdings. However, Fiverr International is 1.22 times more volatile than Tencent Holdings Ltd. It trades about 0.13 of its potential returns per unit of risk. Tencent Holdings Ltd is currently generating about -0.16 per unit of risk. If you would invest 3,200 in Fiverr International on October 20, 2024 and sell it today you would earn a total of 197.00 from holding Fiverr International or generate 6.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fiverr International vs. Tencent Holdings Ltd
Performance |
| Timeline |
| Fiverr International |
| Tencent Holdings |
Fiverr International and Tencent Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fiverr International and Tencent Holdings
The main advantage of trading using opposite Fiverr International and Tencent Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fiverr International 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.| Fiverr International vs. Snap Inc | Fiverr International vs. Twilio Inc | Fiverr International vs. Spotify Technology SA | Fiverr International vs. Baidu Inc |
| Tencent Holdings vs. Twilio Inc | Tencent Holdings vs. Snap Inc | Tencent Holdings vs. Alphabet Inc Class A | Tencent Holdings vs. Pinterest |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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