Correlation Between Tencent Holdings and Arena Group
Can any of the company-specific risk be diversified away by investing in both Tencent Holdings and Arena Group 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 Arena Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tencent Holdings and Arena Group Holdings, you can compare the effects of market volatilities on Tencent Holdings and Arena Group 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 Arena Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Holdings and Arena Group.
Diversification Opportunities for Tencent Holdings and Arena Group
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tencent and Arena is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Holdings and Arena Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arena Group Holdings 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 Arena Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arena Group Holdings has no effect on the direction of Tencent Holdings i.e., Tencent Holdings and Arena Group go up and down completely randomly.
Pair Corralation between Tencent Holdings and Arena Group
Assuming the 90 days horizon Tencent Holdings is expected to generate 0.22 times more return on investment than Arena Group. However, Tencent Holdings is 4.57 times less risky than Arena Group. It trades about 0.02 of its potential returns per unit of risk. Arena Group Holdings is currently generating about 0.0 per unit of risk. If you would invest 4,489 in Tencent Holdings on October 25, 2024 and sell it today you would earn a total of 484.00 from holding Tencent Holdings or generate 10.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Tencent Holdings vs. Arena Group Holdings
Performance |
| Timeline |
| Tencent Holdings |
| Arena Group Holdings |
Tencent Holdings and Arena Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Holdings and Arena Group
The main advantage of trading using opposite Tencent Holdings and Arena Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Holdings position performs unexpectedly, Arena Group 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 Arena Group will offset losses from the drop in Arena Group's long position.| Tencent Holdings vs. Autohome | Tencent Holdings vs. Arena Group Holdings | Tencent Holdings vs. Golden Grail Technology | Tencent Holdings vs. Asset Entities Class |
| Arena Group vs. Cerberus Cyber Sentinel | Arena Group vs. Alta Equipment Group | Arena Group vs. AN2 Therapeutics | Arena Group vs. KORE Group 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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