Correlation Between Tencent Holdings and Yelp
Can any of the company-specific risk be diversified away by investing in both Tencent Holdings and Yelp 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 Yelp 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 Yelp Inc, you can compare the effects of market volatilities on Tencent Holdings and Yelp 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 Yelp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Holdings and Yelp.
Diversification Opportunities for Tencent Holdings and Yelp
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tencent and Yelp is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Holdings Ltd and Yelp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yelp Inc 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 Yelp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yelp Inc has no effect on the direction of Tencent Holdings i.e., Tencent Holdings and Yelp go up and down completely randomly.
Pair Corralation between Tencent Holdings and Yelp
Assuming the 90 days horizon Tencent Holdings is expected to generate 2.57 times less return on investment than Yelp. In addition to that, Tencent Holdings is 1.21 times more volatile than Yelp Inc. It trades about 0.01 of its total potential returns per unit of risk. Yelp Inc is currently generating about 0.04 per unit of volatility. If you would invest 3,064 in Yelp Inc on October 20, 2024 and sell it today you would earn a total of 1,006 from holding Yelp Inc or generate 32.83% 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 Ltd vs. Yelp Inc
Performance |
| Timeline |
| Tencent Holdings |
| Yelp Inc |
Tencent Holdings and Yelp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Holdings and Yelp
The main advantage of trading using opposite Tencent Holdings and Yelp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Holdings position performs unexpectedly, Yelp 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 Yelp will offset losses from the drop in Yelp's long position.| Tencent Holdings vs. Twilio Inc | Tencent Holdings vs. Snap Inc | Tencent Holdings vs. Alphabet Inc Class A | Tencent Holdings vs. Pinterest |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |