Correlation Between Tencent Holdings and FedEx
Can any of the company-specific risk be diversified away by investing in both Tencent Holdings and FedEx 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 FedEx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tencent Holdings and FedEx, you can compare the effects of market volatilities on Tencent Holdings and FedEx 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 FedEx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Holdings and FedEx.
Diversification Opportunities for Tencent Holdings and FedEx
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tencent and FedEx is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Holdings and FedEx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FedEx 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 are associated (or correlated) with FedEx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FedEx has no effect on the direction of Tencent Holdings i.e., Tencent Holdings and FedEx go up and down completely randomly.
Pair Corralation between Tencent Holdings and FedEx
Assuming the 90 days trading horizon Tencent Holdings is expected to generate 1.01 times more return on investment than FedEx. However, Tencent Holdings is 1.01 times more volatile than FedEx. It trades about 0.04 of its potential returns per unit of risk. FedEx is currently generating about 0.04 per unit of risk. If you would invest 3,888 in Tencent Holdings on August 29, 2024 and sell it today you would earn a total of 915.00 from holding Tencent Holdings or generate 23.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tencent Holdings vs. FedEx
Performance |
| Timeline |
| Tencent Holdings |
| FedEx |
Tencent Holdings and FedEx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Holdings and FedEx
The main advantage of trading using opposite Tencent Holdings and FedEx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Holdings position performs unexpectedly, FedEx 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 FedEx will offset losses from the drop in FedEx's long position.| Tencent Holdings vs. BYD Company Limited | Tencent Holdings vs. Alibaba Group Holdings | Tencent Holdings vs. Xiaomi | Tencent Holdings vs. Baidu Inc |
| FedEx vs. DICKS Sporting Goods | FedEx vs. SPORTING | FedEx vs. Ming Le Sports | FedEx vs. Air Transport Services |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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