Correlation Between DouYu International and Auto Trader
Can any of the company-specific risk be diversified away by investing in both DouYu International and Auto Trader 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 DouYu International and Auto Trader into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DouYu International Holdings and Auto Trader Group, you can compare the effects of market volatilities on DouYu International and Auto Trader 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 DouYu International with a short position of Auto Trader. Check out your portfolio center. Please also check ongoing floating volatility patterns of DouYu International and Auto Trader.
Diversification Opportunities for DouYu International and Auto Trader
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between DouYu and Auto is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding DouYu International Holdings and Auto Trader Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auto Trader Group and DouYu International 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 DouYu International Holdings are associated (or correlated) with Auto Trader. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auto Trader Group has no effect on the direction of DouYu International i.e., DouYu International and Auto Trader go up and down completely randomly.
Pair Corralation between DouYu International and Auto Trader
Given the investment horizon of 90 days DouYu International Holdings is expected to under-perform the Auto Trader. In addition to that, DouYu International is 1.5 times more volatile than Auto Trader Group. It trades about -0.17 of its total potential returns per unit of risk. Auto Trader Group is currently generating about -0.17 per unit of volatility. If you would invest 284.00 in Auto Trader Group on August 30, 2024 and sell it today you would lose (24.00) from holding Auto Trader Group or give up 8.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DouYu International Holdings vs. Auto Trader Group
Performance |
| Timeline |
| DouYu International |
| Auto Trader Group |
DouYu International and Auto Trader Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DouYu International and Auto Trader
The main advantage of trading using opposite DouYu International and Auto Trader positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DouYu International position performs unexpectedly, Auto Trader 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 Auto Trader will offset losses from the drop in Auto Trader's long position.| DouYu International vs. YY Inc Class | DouYu International vs. Weibo Corp | DouYu International vs. Tencent Music Entertainment | DouYu International vs. Autohome |
| Auto Trader vs. Tinybeans Group Limited | Auto Trader vs. DGTL Holdings | Auto Trader vs. Sabio Holdings | Auto Trader vs. Zoomd Technologies |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |