Correlation Between Tencent Holdings and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both Tencent Holdings and Samsung Electronics 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 Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tencent Holdings and Samsung Electronics Co, you can compare the effects of market volatilities on Tencent Holdings and Samsung Electronics 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 Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Holdings and Samsung Electronics.
Diversification Opportunities for Tencent Holdings and Samsung Electronics
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tencent and Samsung is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Holdings and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics 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 Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of Tencent Holdings i.e., Tencent Holdings and Samsung Electronics go up and down completely randomly.
Pair Corralation between Tencent Holdings and Samsung Electronics
Assuming the 90 days trading horizon Tencent Holdings is expected to generate 1.26 times more return on investment than Samsung Electronics. However, Tencent Holdings is 1.26 times more volatile than Samsung Electronics Co. It trades about 0.04 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about 0.0 per unit of risk. If you would invest 3,465 in Tencent Holdings on August 28, 2024 and sell it today you would earn a total of 1,436 from holding Tencent Holdings or generate 41.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tencent Holdings vs. Samsung Electronics Co
Performance |
| Timeline |
| Tencent Holdings |
| Samsung Electronics |
Tencent Holdings and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Holdings and Samsung Electronics
The main advantage of trading using opposite Tencent Holdings and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Holdings position performs unexpectedly, Samsung Electronics 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 Samsung Electronics will offset losses from the drop in Samsung Electronics' long position.| Tencent Holdings vs. BYD Company Limited | Tencent Holdings vs. Alibaba Group Holdings | Tencent Holdings vs. Xiaomi | Tencent Holdings vs. Baidu Inc |
| Samsung Electronics vs. Samsung Electronics Co | Samsung Electronics vs. Microsoft | Samsung Electronics vs. Tencent Holdings |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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