Correlation Between DouYu International and Golden Grail

Can any of the company-specific risk be diversified away by investing in both DouYu International and Golden Grail 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 DouYu International and Golden Grail into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DouYu International Holdings and Golden Grail Technology, you can compare the effects of market volatilities on DouYu International and Golden Grail 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 DouYu International with a short position of Golden Grail. Check out your portfolio center. Please also check ongoing floating volatility patterns of DouYu International and Golden Grail.

Diversification Opportunities for DouYu International and Golden Grail

0.59

Correlation Coefficient

DouYu International  Golden Grail

Very weak diversification

The 3 months correlation between DouYu and Golden is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding DouYu International Holdings and Golden Grail Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Grail Technology and DouYu International 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 DouYu International Holdings are associated (or correlated) with Golden Grail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Grail Technology has no effect on the direction of DouYu International i.e., DouYu International and Golden Grail go up and down completely randomly.

Pair Corralation between DouYu International and Golden Grail

Given the investment horizon of 90 days DouYu International Holdings is expected to generate 0.36 times more return on investment than Golden Grail. However, DouYu International Holdings is 2.75 times less risky than Golden Grail. It trades about 0.07 of its potential returns per unit of risk. Golden Grail Technology is currently generating about -0.03 per unit of risk. If you would invest  1,077  in DouYu International Holdings on September 13, 2024 and sell it today you would earn a total of  55.00  from holding DouYu International Holdings or generate 5.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

DouYu International Holdings  vs.  Golden Grail Technology

DouYu International

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DouYu International Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, DouYu International unveiled solid returns over the last few months and may actually be approaching a breakup point.

Golden Grail Technology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Grail Technology are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Golden Grail showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DouYu International and Golden Grail

The main advantage of trading using opposite DouYu International and Golden Grail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DouYu International position performs unexpectedly, Golden Grail 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 Golden Grail will offset losses from the drop in Golden Grail's long position.

The idea behind DouYu International Holdings and Golden Grail Technology 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.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.