Correlation Between Baidu and DouYu International
Can any of the company-specific risk be diversified away by investing in both Baidu and DouYu International 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 Baidu and DouYu International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baidu Inc and DouYu International Holdings, you can compare the effects of market volatilities on Baidu and DouYu International 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 Baidu with a short position of DouYu International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baidu and DouYu International.
Diversification Opportunities for Baidu and DouYu International
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Baidu and DouYu is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Baidu Inc and DouYu International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DouYu International and Baidu 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 Baidu Inc are associated (or correlated) with DouYu International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DouYu International has no effect on the direction of Baidu i.e., Baidu and DouYu International go up and down completely randomly.
Pair Corralation between Baidu and DouYu International
Assuming the 90 days horizon Baidu Inc is expected to under-perform the DouYu International. In addition to that, Baidu is 2.18 times more volatile than DouYu International Holdings. It trades about -0.13 of its total potential returns per unit of risk. DouYu International Holdings is currently generating about -0.09 per unit of volatility. If you would invest 1,079 in DouYu International Holdings on August 28, 2024 and sell it today you would lose (84.00) from holding DouYu International Holdings or give up 7.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baidu Inc vs. DouYu International Holdings
Performance |
| Timeline |
| Baidu Inc |
| DouYu International |
Baidu and DouYu International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baidu and DouYu International
The main advantage of trading using opposite Baidu and DouYu International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baidu position performs unexpectedly, DouYu International 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 DouYu International will offset losses from the drop in DouYu International's long position.| Baidu vs. Trivago NV | Baidu vs. YY Inc Class | Baidu vs. DouYu International Holdings | Baidu vs. Tencent Music Entertainment |
| DouYu International vs. YY Inc Class | DouYu International vs. Weibo Corp | DouYu International vs. Tencent Music Entertainment | DouYu International vs. Autohome |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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