Correlation Between Match and YY
Can any of the company-specific risk be diversified away by investing in both Match and YY 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 Match and YY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Match Group and YY Inc Class, you can compare the effects of market volatilities on Match and YY 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 Match with a short position of YY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Match and YY.
Diversification Opportunities for Match and YY
Very good diversification
The 3 months correlation between Match and YY is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Match Group and YY Inc Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YY Inc Class and Match 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 Match Group are associated (or correlated) with YY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YY Inc Class has no effect on the direction of Match i.e., Match and YY go up and down completely randomly.
Pair Corralation between Match and YY
Given the investment horizon of 90 days Match is expected to generate 4.06 times less return on investment than YY. In addition to that, Match is 1.02 times more volatile than YY Inc Class. It trades about 0.01 of its total potential returns per unit of risk. YY Inc Class is currently generating about 0.06 per unit of volatility. If you would invest 2,654 in YY Inc Class on November 1, 2024 and sell it today you would earn a total of 1,870 from holding YY Inc Class or generate 70.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Match Group vs. YY Inc Class
Performance |
| Timeline |
| Match Group |
| YY Inc Class |
Match and YY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Match and YY
The main advantage of trading using opposite Match and YY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Match position performs unexpectedly, YY 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 YY will offset losses from the drop in YY's long position.The idea behind Match Group and YY Inc Class pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| YY vs. Weibo Corp | YY vs. DouYu International Holdings | YY vs. Tencent Music Entertainment | YY 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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