Correlation Between Golden Grail and Tencent Holdings

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

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

Diversification Opportunities for Golden Grail and Tencent Holdings

-0.63

Correlation Coefficient

Golden Grail  Tencent Holdings

Excellent diversification

The 3 months correlation between Golden and Tencent is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Golden Grail Technology and Tencent Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tencent Holdings and Golden Grail 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 Golden Grail Technology 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 Golden Grail i.e., Golden Grail and Tencent Holdings go up and down completely randomly.

Pair Corralation between Golden Grail and Tencent Holdings

Given the investment horizon of 90 days Golden Grail Technology is expected to under-perform the Tencent Holdings. In addition to that, Golden Grail is 3.03 times more volatile than Tencent Holdings. It trades about -0.06 of its total potential returns per unit of risk. Tencent Holdings is currently generating about 0.11 per unit of volatility. If you would invest  5,385  in Tencent Holdings on December 29, 2024 and sell it today you would earn a total of  1,053  from holding Tencent Holdings or generate 19.55% return on investment over 90 days.

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

Golden Grail Technology  vs.  Tencent Holdings

Golden Grail Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Golden Grail Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Tencent Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tencent Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Tencent Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Golden Grail and Tencent Holdings

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