Correlation Between DouYu International and Liberty Tripadvisor

Can any of the company-specific risk be diversified away by investing in both DouYu International and Liberty Tripadvisor 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 Liberty Tripadvisor 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 Liberty Tripadvisor Holdings, you can compare the effects of market volatilities on DouYu International and Liberty Tripadvisor 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 Liberty Tripadvisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of DouYu International and Liberty Tripadvisor.

Diversification Opportunities for DouYu International and Liberty Tripadvisor

0.07

Correlation Coefficient

DouYu International  Liberty Tripadvisor

Significant diversification

The 3 months correlation between DouYu and Liberty is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding DouYu International Holdings and Liberty Tripadvisor Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Tripadvisor 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 Liberty Tripadvisor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Tripadvisor has no effect on the direction of DouYu International i.e., DouYu International and Liberty Tripadvisor go up and down completely randomly.

Pair Corralation between DouYu International and Liberty Tripadvisor

If you would invest  938.00  in DouYu International Holdings on August 31, 2024 and sell it today you would earn a total of  62.00  from holding DouYu International Holdings or generate 6.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

DouYu International Holdings  vs.  Liberty Tripadvisor Holdings

DouYu International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DouYu International Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, DouYu International may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Liberty Tripadvisor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liberty Tripadvisor Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Liberty Tripadvisor is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with DouYu International and Liberty Tripadvisor

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

The idea behind DouYu International Holdings and Liberty Tripadvisor Holdings 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.