Correlation Between Tencent Holdings and YY
Can any of the company-specific risk be diversified away by investing in both Tencent Holdings and YY 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 YY 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 YY Inc Class, you can compare the effects of market volatilities on Tencent Holdings and YY 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 YY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Holdings and YY.
Diversification Opportunities for Tencent Holdings and YY
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Tencent and YY is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Holdings Ltd and YY Inc Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YY Inc Class 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 YY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YY Inc Class has no effect on the direction of Tencent Holdings i.e., Tencent Holdings and YY go up and down completely randomly.
Pair Corralation between Tencent Holdings and YY
Assuming the 90 days horizon Tencent Holdings Ltd is expected to generate 0.96 times more return on investment than YY. However, Tencent Holdings Ltd is 1.04 times less risky than YY. It trades about 0.02 of its potential returns per unit of risk. YY Inc Class is currently generating about 0.01 per unit of risk. If you would invest 4,713 in Tencent Holdings Ltd on August 27, 2024 and sell it today you would earn a total of 407.00 from holding Tencent Holdings Ltd or generate 8.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tencent Holdings Ltd vs. YY Inc Class
Performance |
| Timeline |
| Tencent Holdings |
| YY Inc Class |
Tencent Holdings and YY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Holdings and YY
The main advantage of trading using opposite Tencent Holdings and YY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Holdings position performs unexpectedly, YY 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 YY will offset losses from the drop in YY's long position.| Tencent Holdings vs. Twilio Inc | Tencent Holdings vs. Snap Inc | Tencent Holdings vs. Alphabet Inc Class A | Tencent Holdings vs. Pinterest |
| YY vs. Weibo Corp | YY vs. DouYu International Holdings | YY vs. Tencent Music Entertainment | YY vs. Autohome |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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