Correlation Between NYSE Composite and Tencent Holdings
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Tencent Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Tencent Holdings Ltd, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Tencent Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Tencent Holdings.
Diversification Opportunities for NYSE Composite and Tencent Holdings
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Tencent is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Tencent Holdings Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tencent Holdings and NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Tencent Holdings go up and down completely randomly.
Pair Corralation between NYSE Composite and Tencent Holdings
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.3 times more return on investment than Tencent Holdings. However, NYSE Composite is 3.38 times less risky than Tencent Holdings. It trades about 0.26 of its potential returns per unit of risk. Tencent Holdings Ltd is currently generating about -0.12 per unit of risk. If you would invest 1,945,669 in NYSE Composite on August 30, 2024 and sell it today you would earn a total of 75,313 from holding NYSE Composite or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
NYSE Composite vs. Tencent Holdings Ltd
Performance |
| Timeline |
NYSE Composite and Tencent Holdings Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Tencent Holdings Ltd
Pair trading matchups for Tencent Holdings
Pair Trading with NYSE Composite and Tencent Holdings
The main advantage of trading using opposite NYSE Composite and Tencent Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Delek Drilling | NYSE Composite vs. Helmerich and Payne | NYSE Composite vs. Waste Management | NYSE Composite vs. US Global Investors |
| Tencent Holdings vs. Meta Platforms | Tencent Holdings vs. Alphabet Inc Class C | Tencent Holdings vs. Twilio Inc | Tencent Holdings vs. Snap Inc |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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