Correlation Between Orea Mining and Tencent Holdings

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

Diversification Opportunities for Orea Mining and Tencent Holdings

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  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between Orea Mining and Tencent Holdings

Assuming the 90 days horizon Orea Mining Corp is expected to generate 4.26 times more return on investment than Tencent Holdings. However, Orea Mining is 4.26 times more volatile than Tencent Holdings. It trades about 0.02 of its potential returns per unit of risk. Tencent Holdings is currently generating about 0.0 per unit of risk. If you would invest  5.00  in Orea Mining Corp on December 29, 2023 and sell it today you would lose (4.00) from holding Orea Mining Corp or give up 80.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Orea Mining Corp  vs.  Tencent Holdings Ltd

 Performance 
       Timeline  
Orea Mining Corp 

Risk-Adjusted Performance

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Over the last 90 days Orea Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Orea Mining is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.
Tencent Holdings 

Risk-Adjusted Performance

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Low
 
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Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Tencent Holdings are ranked lower than 2 (%) 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 current stock price disturbance, may contribute to short-term losses for the investors.

Orea Mining and Tencent Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Orea Mining and Tencent Holdings

The main advantage of trading using opposite Orea Mining and Tencent Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orea Mining 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 Orea Mining Corp 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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