Correlation Between Tencent Holdings and HomeToGo
Can any of the company-specific risk be diversified away by investing in both Tencent Holdings and HomeToGo 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 HomeToGo 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 HomeToGo SE, you can compare the effects of market volatilities on Tencent Holdings and HomeToGo 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 HomeToGo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Holdings and HomeToGo.
Diversification Opportunities for Tencent Holdings and HomeToGo
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tencent and HomeToGo is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Holdings Ltd and HomeToGo SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeToGo SE 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 HomeToGo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HomeToGo SE has no effect on the direction of Tencent Holdings i.e., Tencent Holdings and HomeToGo go up and down completely randomly.
Pair Corralation between Tencent Holdings and HomeToGo
Assuming the 90 days trading horizon Tencent Holdings Ltd is expected to generate 0.69 times more return on investment than HomeToGo. However, Tencent Holdings Ltd is 1.45 times less risky than HomeToGo. It trades about -0.08 of its potential returns per unit of risk. HomeToGo SE is currently generating about -0.13 per unit of risk. If you would invest 4,960 in Tencent Holdings Ltd on August 29, 2024 and sell it today you would lose (180.00) from holding Tencent Holdings Ltd or give up 3.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tencent Holdings Ltd vs. HomeToGo SE
Performance |
| Timeline |
| Tencent Holdings |
| HomeToGo SE |
Tencent Holdings and HomeToGo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Holdings and HomeToGo
The main advantage of trading using opposite Tencent Holdings and HomeToGo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Holdings position performs unexpectedly, HomeToGo 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 HomeToGo will offset losses from the drop in HomeToGo's long position.| Tencent Holdings vs. TROPHY GAMES DEV | Tencent Holdings vs. Penn National Gaming | Tencent Holdings vs. Air Transport Services | Tencent Holdings vs. Fukuyama Transporting Co |
| HomeToGo vs. Ryanair Holdings plc | HomeToGo vs. SYSTEMAIR AB | HomeToGo vs. Harmony Gold Mining | HomeToGo vs. Westinghouse Air Brake |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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