Correlation Between LINE and Tencent Holdings
Can any of the company-specific risk be diversified away by investing in both LINE 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 LINE and Tencent Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LINE Corporation and Tencent Holdings, you can compare the effects of market volatilities on LINE 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 LINE with a short position of Tencent Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of LINE and Tencent Holdings.
Diversification Opportunities for LINE and Tencent Holdings
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between LINE and Tencent is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LINE Corp. and Tencent Holdings Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tencent Holdings and LINE 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 LINE Corporation 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 LINE i.e., LINE and Tencent Holdings go up and down completely randomly.
Pair Corralation between LINE and Tencent Holdings
If you would invest 3,498 in Tencent Holdings on December 30, 2023 and sell it today you would earn a total of 405.00 from holding Tencent Holdings or generate 11.58% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 0.0% |
Values | Daily Returns |
LINE Corp. vs. Tencent Holdings Ltd
Performance |
Timeline |
LINE |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
Tencent Holdings |
LINE and Tencent Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LINE and Tencent Holdings
The main advantage of trading using opposite LINE and Tencent Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LINE 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.The idea behind LINE Corporation and Tencent Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.Tencent Holdings vs. Alphabet Class C | Tencent Holdings vs. Meta Platforms | Tencent Holdings vs. Tencent Holdings | Tencent Holdings vs. Prosus |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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