Correlation Between Roku and HUYA
Can any of the company-specific risk be diversified away by investing in both Roku and HUYA 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 Roku and HUYA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roku Inc and HUYA Inc, you can compare the effects of market volatilities on Roku and HUYA 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 Roku with a short position of HUYA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roku and HUYA.
Diversification Opportunities for Roku and HUYA
Modest diversification
The 3 months correlation between Roku and HUYA is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Roku Inc and HUYA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUYA Inc and Roku 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 Roku Inc are associated (or correlated) with HUYA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUYA Inc has no effect on the direction of Roku i.e., Roku and HUYA go up and down completely randomly.
Pair Corralation between Roku and HUYA
Given the investment horizon of 90 days Roku Inc is expected to under-perform the HUYA. But the stock apears to be less risky and, when comparing its historical volatility, Roku Inc is 1.48 times less risky than HUYA. The stock trades about -0.03 of its potential returns per unit of risk. The HUYA Inc is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 302.00 in HUYA Inc on November 9, 2024 and sell it today you would earn a total of 67.00 from holding HUYA Inc or generate 22.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Roku Inc vs. HUYA Inc
Performance |
| Timeline |
| Roku Inc |
| HUYA Inc |
Roku and HUYA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roku and HUYA
The main advantage of trading using opposite Roku and HUYA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roku position performs unexpectedly, HUYA 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 HUYA will offset losses from the drop in HUYA's long position.| Roku vs. Walt Disney | Roku vs. AMC Entertainment Holdings | Roku vs. Paramount Global Class | Roku vs. Warner Bros Discovery |
| HUYA vs. Roku Inc | HUYA vs. Paramount Global Class | HUYA vs. Manchester United | HUYA vs. Warner Bros Discovery |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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