Correlation Between Iren SpA and Tencent Holdings

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Can any of the company-specific risk be diversified away by investing in both Iren SpA 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 Iren SpA and Tencent Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iren SpA and Tencent Holdings, you can compare the effects of market volatilities on Iren SpA 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 Iren SpA with a short position of Tencent Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iren SpA and Tencent Holdings.

Diversification Opportunities for Iren SpA and Tencent Holdings

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between IRDEF and Tencent is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Iren SpA and Tencent Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tencent Holdings and Iren SpA 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 Iren SpA 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 Iren SpA i.e., Iren SpA and Tencent Holdings go up and down completely randomly.

Pair Corralation between Iren SpA and Tencent Holdings

If you would invest  4,402  in Tencent Holdings on November 4, 2022 and sell it today you would earn a total of  478.00  from holding Tencent Holdings or generate 10.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy95.24%
ValuesDaily Returns

Iren SpA  vs.  Tencent Holdings

 Performance (%) 
       Timeline  
Iren SpA 
IRDEF Performance
0 of 100
Over the last 90 days Iren SpA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Iren SpA is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

IRDEF Price Channel

Tencent Holdings 
Tencent Performance
19 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Tencent Holdings are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Tencent Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Tencent Price Channel

Iren SpA and Tencent Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Iren SpA and Tencent Holdings

The main advantage of trading using opposite Iren SpA and Tencent Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iren SpA 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.
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The idea behind Iren SpA 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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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 ETF Directory module to find actively traded Exchange Traded Funds (ETF) from around the world.

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