Correlation Between Tencent Holdings and PARKEN Sport
Can any of the company-specific risk be diversified away by investing in both Tencent Holdings and PARKEN Sport 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 Tencent Holdings and PARKEN Sport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tencent Holdings Ltd and PARKEN Sport Entertainment, you can compare the effects of market volatilities on Tencent Holdings and PARKEN Sport 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 Tencent Holdings with a short position of PARKEN Sport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Holdings and PARKEN Sport.
Diversification Opportunities for Tencent Holdings and PARKEN Sport
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Tencent and PARKEN is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Holdings Ltd and PARKEN Sport Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PARKEN Sport Enterta and Tencent Holdings 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 Tencent Holdings Ltd are associated (or correlated) with PARKEN Sport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PARKEN Sport Enterta has no effect on the direction of Tencent Holdings i.e., Tencent Holdings and PARKEN Sport go up and down completely randomly.
Pair Corralation between Tencent Holdings and PARKEN Sport
Assuming the 90 days trading horizon Tencent Holdings Ltd is expected to generate 1.21 times more return on investment than PARKEN Sport. However, Tencent Holdings is 1.21 times more volatile than PARKEN Sport Entertainment. It trades about 0.13 of its potential returns per unit of risk. PARKEN Sport Entertainment is currently generating about 0.09 per unit of risk. If you would invest 4,920 in Tencent Holdings Ltd on December 3, 2024 and sell it today you would earn a total of 1,030 from holding Tencent Holdings Ltd or generate 20.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.36% |
| Values | Daily Returns |
Tencent Holdings Ltd vs. PARKEN Sport Entertainment
Performance |
| Timeline |
| Tencent Holdings |
| PARKEN Sport Enterta |
Tencent Holdings and PARKEN Sport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Holdings and PARKEN Sport
The main advantage of trading using opposite Tencent Holdings and PARKEN Sport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Holdings position performs unexpectedly, PARKEN Sport 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 PARKEN Sport will offset losses from the drop in PARKEN Sport's long position.| Tencent Holdings vs. FIREWEED METALS P | Tencent Holdings vs. KENEDIX OFFICE INV | Tencent Holdings vs. Transport International Holdings | Tencent Holdings vs. CORNISH METALS INC |
| PARKEN Sport vs. SYSTEMAIR AB | PARKEN Sport vs. Addtech AB | PARKEN Sport vs. Enter Air SA | PARKEN Sport vs. AIR CHINA LTD |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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