Correlation Between YY and Lizhi
Can any of the company-specific risk be diversified away by investing in both YY and Lizhi 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 YY and Lizhi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between YY Inc Class and Lizhi Inc, you can compare the effects of market volatilities on YY and Lizhi 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 YY with a short position of Lizhi. Check out your portfolio center. Please also check ongoing floating volatility patterns of YY and Lizhi.
Diversification Opportunities for YY and Lizhi
Very good diversification
The 3 months correlation between YY and Lizhi is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding YY Inc Class and Lizhi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lizhi Inc and YY 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 YY Inc Class are associated (or correlated) with Lizhi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lizhi Inc has no effect on the direction of YY i.e., YY and Lizhi go up and down completely randomly.
Pair Corralation between YY and Lizhi
Allowing for the 90-day total investment horizon YY Inc Class is expected to generate 0.43 times more return on investment than Lizhi. However, YY Inc Class is 2.3 times less risky than Lizhi. It trades about 0.01 of its potential returns per unit of risk. Lizhi Inc is currently generating about -0.01 per unit of risk. If you would invest 3,360 in YY Inc Class on August 27, 2024 and sell it today you would earn a total of 31.00 from holding YY Inc Class or generate 0.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 25.71% |
| Values | Daily Returns |
YY Inc Class vs. Lizhi Inc
Performance |
| Timeline |
| YY Inc Class |
| Lizhi Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
YY and Lizhi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YY and Lizhi
The main advantage of trading using opposite YY and Lizhi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YY position performs unexpectedly, Lizhi 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 Lizhi will offset losses from the drop in Lizhi's long position.| 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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