Correlation Between Berkshire Hathaway and Tencent Holdings
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway 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 Berkshire Hathaway and Tencent Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Tencent Holdings, you can compare the effects of market volatilities on Berkshire Hathaway 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 Berkshire Hathaway with a short position of Tencent Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Tencent Holdings.
Diversification Opportunities for Berkshire Hathaway and Tencent Holdings
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Berkshire and Tencent is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Tencent Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tencent Holdings and Berkshire Hathaway 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 Berkshire Hathaway 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 Berkshire Hathaway i.e., Berkshire Hathaway and Tencent Holdings go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Tencent Holdings
Assuming the 90 days horizon Berkshire Hathaway is expected to under-perform the Tencent Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Berkshire Hathaway is 1.84 times less risky than Tencent Holdings. The stock trades about -0.26 of its potential returns per unit of risk. The Tencent Holdings is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 3,644 in Tencent Holdings on January 20, 2024 and sell it today you would earn a total of 181.00 from holding Tencent Holdings or generate 4.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Berkshire Hathaway vs. Tencent Holdings
Performance |
| Timeline |
| Berkshire Hathaway |
| Tencent Holdings |
Berkshire Hathaway and Tencent Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Tencent Holdings
The main advantage of trading using opposite Berkshire Hathaway and Tencent Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway 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.| Berkshire Hathaway vs. American International Group | Berkshire Hathaway vs. Arch Capital Group | Berkshire Hathaway vs. Sun Life Financial | Berkshire Hathaway vs. Hartford Financial Services |
| 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| AI Investment Finder Use AI to screen and filter profitable investment opportunities | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |