Correlation Between DouYu International and IAC
Can any of the company-specific risk be diversified away by investing in both DouYu International and IAC 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 IAC 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 IAC Inc, you can compare the effects of market volatilities on DouYu International and IAC 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 IAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of DouYu International and IAC.
Diversification Opportunities for DouYu International and IAC
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DouYu and IAC is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding DouYu International Holdings and IAC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAC Inc 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 IAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IAC Inc has no effect on the direction of DouYu International i.e., DouYu International and IAC go up and down completely randomly.
Pair Corralation between DouYu International and IAC
Given the investment horizon of 90 days DouYu International Holdings is expected to generate 5.42 times more return on investment than IAC. However, DouYu International is 5.42 times more volatile than IAC Inc. It trades about 0.31 of its potential returns per unit of risk. IAC Inc is currently generating about -0.11 per unit of risk. If you would invest 1,084 in DouYu International Holdings on November 5, 2024 and sell it today you would earn a total of 484.00 from holding DouYu International Holdings or generate 44.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DouYu International Holdings vs. IAC Inc
Performance |
| Timeline |
| DouYu International |
| IAC Inc |
DouYu International and IAC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DouYu International and IAC
The main advantage of trading using opposite DouYu International and IAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DouYu International position performs unexpectedly, IAC 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 IAC will offset losses from the drop in IAC's long position.| 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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