Correlation Between Hello and Tencent Holdings

Can any of the company-specific risk be diversified away by investing in both Hello 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 Hello and Tencent Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hello Group and Tencent Holdings Ltd, you can compare the effects of market volatilities on Hello 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 Hello with a short position of Tencent Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hello and Tencent Holdings.

Diversification Opportunities for Hello and Tencent Holdings

0.59

Correlation Coefficient

Hello  Tencent Holdings

Very weak diversification

The 3 months correlation between Hello and Tencent is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Hello Group and Tencent Holdings Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tencent Holdings and Hello 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 Hello Group 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 Hello i.e., Hello and Tencent Holdings go up and down completely randomly.

Pair Corralation between Hello and Tencent Holdings

Given the investment horizon of 90 days Hello is expected to generate 3.02 times less return on investment than Tencent Holdings. In addition to that, Hello is 1.36 times more volatile than Tencent Holdings Ltd. It trades about 0.01 of its total potential returns per unit of risk. Tencent Holdings Ltd is currently generating about 0.06 per unit of volatility. If you would invest  4,100  in Tencent Holdings Ltd on March 28, 2025 and sell it today you would earn a total of  2,406  from holding Tencent Holdings Ltd or generate 58.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Hello Group  vs.  Tencent Holdings Ltd

Hello Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hello Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Hello displayed solid returns over the last few months and may actually be approaching a breakup point.

Tencent Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tencent Holdings Ltd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, Tencent Holdings is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hello and Tencent Holdings

The main advantage of trading using opposite Hello and Tencent Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hello 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 Hello Group and Tencent Holdings Ltd 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.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.