Correlation Between YY and Hello
Can any of the company-specific risk be diversified away by investing in both YY and Hello 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 Hello 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 Hello Group, you can compare the effects of market volatilities on YY and Hello 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 Hello. Check out your portfolio center. Please also check ongoing floating volatility patterns of YY and Hello.
Diversification Opportunities for YY and Hello
Average diversification
The 3 months correlation between YY and Hello is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding YY Inc Class and Hello Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hello Group 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 Hello. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hello Group has no effect on the direction of YY i.e., YY and Hello go up and down completely randomly.
Pair Corralation between YY and Hello
Allowing for the 90-day total investment horizon YY Inc Class is expected to generate 0.81 times more return on investment than Hello. However, YY Inc Class is 1.24 times less risky than Hello. It trades about 0.01 of its potential returns per unit of risk. Hello Group 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 Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
YY Inc Class vs. Hello Group
Performance |
| Timeline |
| YY Inc Class |
| Hello Group |
YY and Hello Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YY and Hello
The main advantage of trading using opposite YY and Hello positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YY position performs unexpectedly, Hello 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 Hello will offset losses from the drop in Hello's long position.| YY vs. Weibo Corp | YY vs. DouYu International Holdings | YY vs. Tencent Music Entertainment | YY vs. Autohome |
| Hello vs. Weibo Corp | Hello vs. Autohome | Hello vs. Tencent Music Entertainment | Hello vs. DouYu International Holdings |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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