Correlation Between Tencent Holdings and DoorDash,

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

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

Diversification Opportunities for Tencent Holdings and DoorDash,

0.27

Correlation Coefficient

Tencent Holdings  DoorDash,

Modest diversification

The 3 months correlation between Tencent and DoorDash, is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Holdings Ltd and DoorDash, Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DoorDash, Class A and Tencent Holdings 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 Tencent Holdings Ltd are associated (or correlated) with DoorDash,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DoorDash, Class A has no effect on the direction of Tencent Holdings i.e., Tencent Holdings and DoorDash, go up and down completely randomly.

Pair Corralation between Tencent Holdings and DoorDash,

Assuming the 90 days horizon Tencent Holdings is expected to generate 4.18 times less return on investment than DoorDash,. In addition to that, Tencent Holdings is 1.84 times more volatile than DoorDash, Class A. It trades about 0.05 of its total potential returns per unit of risk. DoorDash, Class A is currently generating about 0.4 per unit of volatility. If you would invest  12,505  in DoorDash, Class A on September 1, 2024 and sell it today you would earn a total of  5,543  from holding DoorDash, Class A or generate 44.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Tencent Holdings Ltd  vs.  DoorDash, Class A

Tencent Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tencent Holdings Ltd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical indicators, Tencent Holdings may actually be approaching a critical reversion point that can send shares even higher in December 2024.

DoorDash, Class A

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in DoorDash, Class A are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, DoorDash, demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tencent Holdings and DoorDash,

The main advantage of trading using opposite Tencent Holdings and DoorDash, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Holdings position performs unexpectedly, DoorDash, 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 DoorDash, will offset losses from the drop in DoorDash,'s long position.

The idea behind Tencent Holdings Ltd and DoorDash, Class A 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.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .