Correlation Between SAFETY MEDICAL and Tencent Holdings
Can any of the company-specific risk be diversified away by investing in both SAFETY MEDICAL 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 SAFETY MEDICAL and Tencent Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAFETY MEDICAL PROD and Tencent Holdings Ltd, you can compare the effects of market volatilities on SAFETY MEDICAL 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 SAFETY MEDICAL with a short position of Tencent Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAFETY MEDICAL and Tencent Holdings.
Diversification Opportunities for SAFETY MEDICAL and Tencent Holdings
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between SAFETY and Tencent is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding SAFETY MEDICAL PROD and Tencent Holdings Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tencent Holdings and SAFETY MEDICAL 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 SAFETY MEDICAL PROD 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 SAFETY MEDICAL i.e., SAFETY MEDICAL and Tencent Holdings go up and down completely randomly.
Pair Corralation between SAFETY MEDICAL and Tencent Holdings
Assuming the 90 days trading horizon SAFETY MEDICAL PROD is expected to under-perform the Tencent Holdings. In addition to that, SAFETY MEDICAL is 1.41 times more volatile than Tencent Holdings Ltd. It trades about -0.02 of its total potential returns per unit of risk. Tencent Holdings Ltd is currently generating about 0.04 per unit of volatility. If you would invest 3,836 in Tencent Holdings Ltd on August 30, 2024 and sell it today you would earn a total of 1,004 from holding Tencent Holdings Ltd or generate 26.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SAFETY MEDICAL PROD vs. Tencent Holdings Ltd
Performance |
| Timeline |
| SAFETY MEDICAL PROD |
| Tencent Holdings |
SAFETY MEDICAL and Tencent Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SAFETY MEDICAL and Tencent Holdings
The main advantage of trading using opposite SAFETY MEDICAL and Tencent Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAFETY MEDICAL 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.| SAFETY MEDICAL vs. Apple Inc | SAFETY MEDICAL vs. Apple Inc | SAFETY MEDICAL vs. Superior Plus Corp | SAFETY MEDICAL vs. SIVERS SEMICONDUCTORS AB |
| Tencent Holdings vs. STMICROELECTRONICS | Tencent Holdings vs. Richardson Electronics | Tencent Holdings vs. ELECTRONIC ARTS | Tencent Holdings vs. UET United Electronic |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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