Correlation Between DouYu International and Carsales
Can any of the company-specific risk be diversified away by investing in both DouYu International and Carsales 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 Carsales 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 CarsalesCom Ltd ADR, you can compare the effects of market volatilities on DouYu International and Carsales 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 Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of DouYu International and Carsales.
Diversification Opportunities for DouYu International and Carsales
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between DouYu and Carsales is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding DouYu International Holdings and CarsalesCom Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom ADR 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 Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom ADR has no effect on the direction of DouYu International i.e., DouYu International and Carsales go up and down completely randomly.
Pair Corralation between DouYu International and Carsales
Given the investment horizon of 90 days DouYu International is expected to generate 3.42 times less return on investment than Carsales. In addition to that, DouYu International is 2.18 times more volatile than CarsalesCom Ltd ADR. It trades about 0.01 of its total potential returns per unit of risk. CarsalesCom Ltd ADR is currently generating about 0.08 per unit of volatility. If you would invest 2,803 in CarsalesCom Ltd ADR on August 30, 2024 and sell it today you would earn a total of 2,696 from holding CarsalesCom Ltd ADR or generate 96.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 88.89% |
| Values | Daily Returns |
DouYu International Holdings vs. CarsalesCom Ltd ADR
Performance |
| Timeline |
| DouYu International |
| CarsalesCom ADR |
DouYu International and Carsales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DouYu International and Carsales
The main advantage of trading using opposite DouYu International and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DouYu International position performs unexpectedly, Carsales 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 Carsales will offset losses from the drop in Carsales' long position.| DouYu International vs. YY Inc Class | DouYu International vs. Weibo Corp | DouYu International vs. Tencent Music Entertainment | DouYu International vs. Autohome |
| Carsales vs. Quizam Media | Carsales vs. DGTL Holdings | Carsales vs. Tinybeans Group Limited | Carsales vs. Sabio Holdings |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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