Correlation Between DouYu International and Frontier Communications
Can any of the company-specific risk be diversified away by investing in both DouYu International and Frontier Communications 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 Frontier Communications 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 Frontier Communications Parent, you can compare the effects of market volatilities on DouYu International and Frontier Communications 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 Frontier Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of DouYu International and Frontier Communications.
Diversification Opportunities for DouYu International and Frontier Communications
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DouYu and Frontier is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding DouYu International Holdings and Frontier Communications Parent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Communications 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 Frontier Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Communications has no effect on the direction of DouYu International i.e., DouYu International and Frontier Communications go up and down completely randomly.
Pair Corralation between DouYu International and Frontier Communications
Given the investment horizon of 90 days DouYu International Holdings is expected to under-perform the Frontier Communications. In addition to that, DouYu International is 104.12 times more volatile than Frontier Communications Parent. It trades about -0.18 of its total potential returns per unit of risk. Frontier Communications Parent is currently generating about 0.18 per unit of volatility. If you would invest 3,576 in Frontier Communications Parent on November 28, 2024 and sell it today you would earn a total of 17.00 from holding Frontier Communications Parent or generate 0.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DouYu International Holdings vs. Frontier Communications Parent
Performance |
| Timeline |
| DouYu International |
| Frontier Communications |
DouYu International and Frontier Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DouYu International and Frontier Communications
The main advantage of trading using opposite DouYu International and Frontier Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DouYu International position performs unexpectedly, Frontier Communications 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 Frontier Communications will offset losses from the drop in Frontier Communications' long position.| DouYu International vs. YY Inc Class | DouYu International vs. Weibo Corp | DouYu International vs. Tencent Music Entertainment | DouYu International vs. Autohome |
| Frontier Communications vs. Cable One | Frontier Communications vs. Charter Communications | Frontier Communications vs. Liberty Broadband Srs | Frontier Communications vs. ATN International |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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