Correlation Between DouYu International and Kuaishou Technology
Can any of the company-specific risk be diversified away by investing in both DouYu International and Kuaishou Technology 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 Kuaishou Technology 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 Kuaishou Technology, you can compare the effects of market volatilities on DouYu International and Kuaishou Technology 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 Kuaishou Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of DouYu International and Kuaishou Technology.
Diversification Opportunities for DouYu International and Kuaishou Technology
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between DouYu and Kuaishou is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding DouYu International Holdings and Kuaishou Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuaishou Technology 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 Kuaishou Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kuaishou Technology has no effect on the direction of DouYu International i.e., DouYu International and Kuaishou Technology go up and down completely randomly.
Pair Corralation between DouYu International and Kuaishou Technology
Given the investment horizon of 90 days DouYu International Holdings is expected to under-perform the Kuaishou Technology. But the stock apears to be less risky and, when comparing its historical volatility, DouYu International Holdings is 1.71 times less risky than Kuaishou Technology. The stock trades about -0.09 of its potential returns per unit of risk. The Kuaishou Technology is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 130.00 in Kuaishou Technology on August 28, 2024 and sell it today you would lose (7.00) from holding Kuaishou Technology or give up 5.38% 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. Kuaishou Technology
Performance |
| Timeline |
| DouYu International |
| Kuaishou Technology |
DouYu International and Kuaishou Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DouYu International and Kuaishou Technology
The main advantage of trading using opposite DouYu International and Kuaishou Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DouYu International position performs unexpectedly, Kuaishou Technology 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 Kuaishou Technology will offset losses from the drop in Kuaishou Technology's long position.| DouYu International vs. YY Inc Class | DouYu International vs. Weibo Corp | DouYu International vs. Tencent Music Entertainment | DouYu International vs. Autohome |
| Kuaishou Technology vs. Trivago NV | Kuaishou Technology vs. YY Inc Class | Kuaishou Technology vs. DouYu International Holdings | Kuaishou Technology vs. Tencent Music Entertainment |
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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