Correlation Between Redbubble and Tencent Holdings

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

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

Diversification Opportunities for Redbubble and Tencent Holdings

0.39

Correlation Coefficient

Redbubble  Tencent Holdings

Weak diversification

The 3 months correlation between Redbubble and Tencent is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Redbubble Limited and Tencent Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tencent Holdings and Redbubble 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 Redbubble Limited 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 Redbubble i.e., Redbubble and Tencent Holdings go up and down completely randomly.

Pair Corralation between Redbubble and Tencent Holdings

Assuming the 90 days horizon Redbubble Limited is expected to generate 3.94 times more return on investment than Tencent Holdings. However, Redbubble is 3.94 times more volatile than Tencent Holdings. It trades about 0.14 of its potential returns per unit of risk. Tencent Holdings is currently generating about 0.12 per unit of risk. If you would invest  10.00  in Redbubble Limited on May 17, 2025 and sell it today you would earn a total of  7.00  from holding Redbubble Limited or generate 70.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Redbubble Limited  vs.  Tencent Holdings

Redbubble Limited

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Redbubble Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental drivers, Redbubble reported solid returns over the last few months and may actually be approaching a breakup point.

Tencent Holdings

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Tencent Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Tencent Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Redbubble and Tencent Holdings

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

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.