Correlation Between Twilio and Tencent Holdings
Can any of the company-specific risk be diversified away by investing in both Twilio 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 Twilio and Tencent Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Twilio Inc and Tencent Holdings, you can compare the effects of market volatilities on Twilio 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 Twilio with a short position of Tencent Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Twilio and Tencent Holdings.
Diversification Opportunities for Twilio and Tencent Holdings
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Twilio and Tencent is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Twilio Inc and Tencent Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tencent Holdings and Twilio 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 Twilio Inc 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 Twilio i.e., Twilio and Tencent Holdings go up and down completely randomly.
Pair Corralation between Twilio and Tencent Holdings
Given the investment horizon of 90 days Twilio is expected to generate 5.46 times less return on investment than Tencent Holdings. But when comparing it to its historical volatility, Twilio Inc is 1.6 times less risky than Tencent Holdings. It trades about 0.1 of its potential returns per unit of risk. Tencent Holdings is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 3,943 in Tencent Holdings on February 4, 2024 and sell it today you would earn a total of 736.50 from holding Tencent Holdings or generate 18.68% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.65% |
Values | Daily Returns |
Twilio Inc vs. Tencent Holdings
Performance |
Timeline |
Twilio Inc |
Tencent Holdings |
Twilio and Tencent Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Twilio and Tencent Holdings
The main advantage of trading using opposite Twilio and Tencent Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Twilio 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.Twilio vs. Snap Inc | Twilio vs. Fiverr International | Twilio vs. Spotify Technology SA | Twilio vs. Baidu 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 Stocks Directory module to find actively traded stocks across global markets.
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