Correlation Between Tencent Holdings and DouYu International
Can any of the company-specific risk be diversified away by investing in both Tencent Holdings and DouYu International 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 Tencent Holdings and DouYu International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tencent Holdings and DouYu International Holdings, you can compare the effects of market volatilities on Tencent Holdings and DouYu International 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 Tencent Holdings with a short position of DouYu International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Holdings and DouYu International.
Diversification Opportunities for Tencent Holdings and DouYu International
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Tencent and DouYu is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Holdings and DouYu International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DouYu International and Tencent Holdings 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 Tencent Holdings are associated (or correlated) with DouYu International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DouYu International has no effect on the direction of Tencent Holdings i.e., Tencent Holdings and DouYu International go up and down completely randomly.
Pair Corralation between Tencent Holdings and DouYu International
Assuming the 90 days horizon Tencent Holdings is expected to generate 1.38 times more return on investment than DouYu International. However, Tencent Holdings is 1.38 times more volatile than DouYu International Holdings. It trades about 0.41 of its potential returns per unit of risk. DouYu International Holdings is currently generating about -0.01 per unit of risk. If you would invest 4,991 in Tencent Holdings on November 18, 2024 and sell it today you would earn a total of 1,179 from holding Tencent Holdings or generate 23.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tencent Holdings vs. DouYu International Holdings
Performance |
| Timeline |
| Tencent Holdings |
| DouYu International |
Tencent Holdings and DouYu International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Holdings and DouYu International
The main advantage of trading using opposite Tencent Holdings and DouYu International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Holdings position performs unexpectedly, DouYu International 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 DouYu International will offset losses from the drop in DouYu International's long position.| Tencent Holdings vs. Autohome | Tencent Holdings vs. Arena Group Holdings | Tencent Holdings vs. Golden Grail Technology | Tencent Holdings vs. Asset Entities Class |
| DouYu International vs. YY Inc Class | DouYu International vs. Weibo Corp | DouYu International vs. Tencent Music Entertainment | DouYu International 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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