Correlation Between Hello and Tencent Holdings
Can any of the company-specific risk be diversified away by investing in both Hello 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 Hello and Tencent Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hello Group and Tencent Holdings, you can compare the effects of market volatilities on Hello 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 Hello with a short position of Tencent Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hello and Tencent Holdings.
Diversification Opportunities for Hello and Tencent Holdings
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hello and Tencent is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Hello Group and Tencent Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tencent Holdings and Hello 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 Hello Group 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 Hello i.e., Hello and Tencent Holdings go up and down completely randomly.
Pair Corralation between Hello and Tencent Holdings
Given the investment horizon of 90 days Hello Group is expected to generate 0.98 times more return on investment than Tencent Holdings. However, Hello Group is 1.02 times less risky than Tencent Holdings. It trades about -0.05 of its potential returns per unit of risk. Tencent Holdings is currently generating about -0.07 per unit of risk. If you would invest 689.00 in Hello Group on August 24, 2024 and sell it today you would lose (21.00) from holding Hello Group or give up 3.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hello Group vs. Tencent Holdings
Performance |
| Timeline |
| Hello Group |
| Tencent Holdings |
Hello and Tencent Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hello and Tencent Holdings
The main advantage of trading using opposite Hello and Tencent Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hello 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.The idea behind Hello Group and Tencent Holdings 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.| Tencent Holdings vs. Autohome | Tencent Holdings vs. Arena Group Holdings | Tencent Holdings vs. Golden Grail Technology | Tencent Holdings vs. Asset Entities Class |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |