Correlation Between HUYA and Warner Music
Can any of the company-specific risk be diversified away by investing in both HUYA and Warner Music 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 HUYA and Warner Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HUYA Inc and Warner Music Group, you can compare the effects of market volatilities on HUYA and Warner Music 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 HUYA with a short position of Warner Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUYA and Warner Music.
Diversification Opportunities for HUYA and Warner Music
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between HUYA and Warner is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding HUYA Inc and Warner Music Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warner Music Group and HUYA 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 HUYA Inc are associated (or correlated) with Warner Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warner Music Group has no effect on the direction of HUYA i.e., HUYA and Warner Music go up and down completely randomly.
Pair Corralation between HUYA and Warner Music
Given the investment horizon of 90 days HUYA Inc is expected to generate 2.23 times more return on investment than Warner Music. However, HUYA is 2.23 times more volatile than Warner Music Group. It trades about 0.25 of its potential returns per unit of risk. Warner Music Group is currently generating about 0.07 per unit of risk. If you would invest 301.00 in HUYA Inc on November 8, 2024 and sell it today you would earn a total of 68.00 from holding HUYA Inc or generate 22.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HUYA Inc vs. Warner Music Group
Performance |
| Timeline |
| HUYA Inc |
| Warner Music Group |
HUYA and Warner Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HUYA and Warner Music
The main advantage of trading using opposite HUYA and Warner Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUYA position performs unexpectedly, Warner Music 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 Warner Music will offset losses from the drop in Warner Music's long position.| HUYA vs. Roku Inc | HUYA vs. Paramount Global Class | HUYA vs. Manchester United | HUYA vs. Warner Bros Discovery |
| Warner Music vs. News Corp A | Warner Music vs. Marcus | Warner Music vs. Liberty Media | Warner Music vs. Fox Corp 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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