Correlation Between Desarrolladora Homex and Tencent Holdings
Can any of the company-specific risk be diversified away by investing in both Desarrolladora Homex 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 Desarrolladora Homex and Tencent Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Desarrolladora Homex SAB and Tencent Holdings, you can compare the effects of market volatilities on Desarrolladora Homex 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 Desarrolladora Homex with a short position of Tencent Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desarrolladora Homex and Tencent Holdings.
Diversification Opportunities for Desarrolladora Homex and Tencent Holdings
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Desarrolladora and Tencent is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Desarrolladora Homex SAB and Tencent Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tencent Holdings and Desarrolladora Homex 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 Desarrolladora Homex SAB 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 Desarrolladora Homex i.e., Desarrolladora Homex and Tencent Holdings go up and down completely randomly.
Pair Corralation between Desarrolladora Homex and Tencent Holdings
Assuming the 90 days horizon Desarrolladora Homex SAB is expected to generate 42.07 times more return on investment than Tencent Holdings. However, Desarrolladora Homex is 42.07 times more volatile than Tencent Holdings. It trades about 0.32 of its potential returns per unit of risk. Tencent Holdings is currently generating about 0.3 per unit of risk. If you would invest 0.01 in Desarrolladora Homex SAB on January 24, 2024 and sell it today you would earn a total of 0.02 from holding Desarrolladora Homex SAB or generate 200.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 50.0% |
| Values | Daily Returns |
Desarrolladora Homex SAB vs. Tencent Holdings
Performance |
| Timeline |
| Desarrolladora Homex SAB |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Tencent Holdings |
Desarrolladora Homex and Tencent Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Desarrolladora Homex and Tencent Holdings
The main advantage of trading using opposite Desarrolladora Homex and Tencent Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Desarrolladora Homex 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.| Desarrolladora Homex vs. Lilium Equity Warrants | Desarrolladora Homex vs. Blade Air Mobility | Desarrolladora Homex vs. HUMANA INC | Desarrolladora Homex vs. Aquagold International |
| Tencent Holdings vs. Ping An Insurance | Tencent Holdings vs. Meituan ADR | Tencent Holdings vs. Murata Manufacturing |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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