Correlation Between Zillow Group and Tencent Holdings
Can any of the company-specific risk be diversified away by investing in both Zillow Group 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 Zillow Group and Tencent Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zillow Group Class and Tencent Holdings Ltd, you can compare the effects of market volatilities on Zillow Group 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 Zillow Group with a short position of Tencent Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zillow Group and Tencent Holdings.
Diversification Opportunities for Zillow Group and Tencent Holdings
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Zillow and Tencent is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Zillow Group Class and Tencent Holdings Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tencent Holdings and Zillow Group 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 Zillow Group Class 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 Zillow Group i.e., Zillow Group and Tencent Holdings go up and down completely randomly.
Pair Corralation between Zillow Group and Tencent Holdings
Taking into account the 90-day investment horizon Zillow Group Class is expected to generate 2.5 times more return on investment than Tencent Holdings. However, Zillow Group is 2.5 times more volatile than Tencent Holdings Ltd. It trades about 0.32 of its potential returns per unit of risk. Tencent Holdings Ltd is currently generating about -0.05 per unit of risk. If you would invest 5,968 in Zillow Group Class on August 31, 2024 and sell it today you would earn a total of 2,577 from holding Zillow Group Class or generate 43.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zillow Group Class vs. Tencent Holdings Ltd
Performance |
| Timeline |
| Zillow Group Class |
| Tencent Holdings |
Zillow Group and Tencent Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zillow Group and Tencent Holdings
The main advantage of trading using opposite Zillow Group and Tencent Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zillow Group 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.| Zillow Group vs. Pinterest | Zillow Group vs. Snap Inc | Zillow Group vs. Spotify Technology SA | Zillow Group vs. Twilio Inc |
| 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 CEOs Directory module to screen CEOs from public companies around the world.
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