Correlation Between DouYu International and Tencent Holdings
Can any of the company-specific risk be diversified away by investing in both DouYu International and Tencent Holdings 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 Tencent Holdings 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 Tencent Holdings, you can compare the effects of market volatilities on DouYu International and Tencent Holdings 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 Tencent Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of DouYu International and Tencent Holdings.
Diversification Opportunities for DouYu International and Tencent Holdings
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DouYu and Tencent is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding DouYu International Holdings and Tencent Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tencent Holdings 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 Tencent Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tencent Holdings has no effect on the direction of DouYu International i.e., DouYu International and Tencent Holdings go up and down completely randomly.
Pair Corralation between DouYu International and Tencent Holdings
Given the investment horizon of 90 days DouYu International Holdings is expected to generate 2.08 times more return on investment than Tencent Holdings. However, DouYu International is 2.08 times more volatile than Tencent Holdings. It trades about 0.12 of its potential returns per unit of risk. Tencent Holdings is currently generating about -0.07 per unit of risk. If you would invest 898.00 in DouYu International Holdings on August 24, 2024 and sell it today you would earn a total of 103.00 from holding DouYu International Holdings or generate 11.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
DouYu International Holdings vs. Tencent Holdings
Performance |
| Timeline |
| DouYu International |
| Tencent Holdings |
DouYu International and Tencent Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DouYu International and Tencent Holdings
The main advantage of trading using opposite DouYu International and Tencent Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DouYu International position performs unexpectedly, Tencent Holdings 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 Tencent Holdings will offset losses from the drop in Tencent Holdings' long position.| DouYu International vs. Twilio Inc | DouYu International vs. Baidu Inc | DouYu International vs. Snap Inc | DouYu International vs. ANGI Homeservices |
| Tencent Holdings vs. Autohome | Tencent Holdings vs. Arena Group Holdings | Tencent Holdings vs. Golden Grail Technology | Tencent Holdings vs. Asset Entities Class |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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