Correlation Between Zillow Group and Tencent Holdings

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

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

Diversification Opportunities for Zillow Group and Tencent Holdings

-0.36

Correlation Coefficient

Zillow Group  Tencent Holdings

Very good diversification

The 3 months correlation between Zillow and Tencent is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Zillow Group Class and Tencent Holdings Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tencent Holdings and Zillow Group 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 Zillow Group Class 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 Zillow Group i.e., Zillow Group and Tencent Holdings go up and down completely randomly.

Pair Corralation between Zillow Group and Tencent Holdings

Taking into account the 90-day investment horizon Zillow Group Class is expected to under-perform the Tencent Holdings. But the etf apears to be less risky and, when comparing its historical volatility, Zillow Group Class is 1.1 times less risky than Tencent Holdings. The etf trades about -0.04 of its potential returns per unit of risk. The Tencent Holdings Ltd is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  5,323  in Tencent Holdings Ltd on December 28, 2024 and sell it today you would earn a total of  1,184  from holding Tencent Holdings Ltd or generate 22.24% return on investment over 90 days.

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

Zillow Group Class  vs.  Tencent Holdings Ltd

Zillow Group Class

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zillow Group Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Tencent Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tencent Holdings Ltd are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical indicators, Tencent Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zillow Group and Tencent Holdings

The main advantage of trading using opposite Zillow Group and Tencent Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zillow Group 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 Zillow Group Class 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.