Correlation Between ASURE SOFTWARE and Tencent Holdings

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

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

Diversification Opportunities for ASURE SOFTWARE and Tencent Holdings

-0.11

Correlation Coefficient

ASURE SOFTWARE  Tencent Holdings

Good diversification

The 3 months correlation between ASURE and Tencent is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding ASURE SOFTWARE and Tencent Holdings Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tencent Holdings and ASURE SOFTWARE 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 ASURE SOFTWARE 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 ASURE SOFTWARE i.e., ASURE SOFTWARE and Tencent Holdings go up and down completely randomly.

Pair Corralation between ASURE SOFTWARE and Tencent Holdings

Assuming the 90 days trading horizon ASURE SOFTWARE is expected to generate 1.54 times less return on investment than Tencent Holdings. But when comparing it to its historical volatility, ASURE SOFTWARE is 1.38 times less risky than Tencent Holdings. It trades about 0.09 of its potential returns per unit of risk. Tencent Holdings Ltd is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  4,940  in Tencent Holdings Ltd on October 6, 2024 and sell it today you would earn a total of  210.00  from holding Tencent Holdings Ltd or generate 4.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ASURE SOFTWARE  vs.  Tencent Holdings Ltd

ASURE SOFTWARE

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ASURE SOFTWARE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, ASURE SOFTWARE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Tencent Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tencent Holdings Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with ASURE SOFTWARE and Tencent Holdings

The main advantage of trading using opposite ASURE SOFTWARE and Tencent Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASURE SOFTWARE 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 ASURE SOFTWARE and Tencent Holdings Ltd 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.