Correlation Between DouYu International and Snap

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

Diversification Opportunities for DouYu International and Snap

0.53

Correlation Coefficient

DouYu International  Snap

Very weak diversification

The 3 months correlation between DouYu and Snap is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding DouYu International Holdings and Snap Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snap Inc 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 Snap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snap Inc has no effect on the direction of DouYu International i.e., DouYu International and Snap go up and down completely randomly.

Pair Corralation between DouYu International and Snap

Given the investment horizon of 90 days DouYu International Holdings is expected to generate 2.74 times more return on investment than Snap. However, DouYu International is 2.74 times more volatile than Snap Inc. It trades about -0.01 of its potential returns per unit of risk. Snap Inc is currently generating about -0.07 per unit of risk. If you would invest  1,129  in DouYu International Holdings on December 28, 2024 and sell it today you would lose (357.00) from holding DouYu International Holdings or give up 31.62% of portfolio value over 90 days.

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

DouYu International Holdings  vs.  Snap Inc

DouYu International

Risk-Adjusted Performance

Very Weak

Over the last 90 days DouYu International Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, DouYu International is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Snap Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Snap Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with DouYu International and Snap

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

The idea behind DouYu International Holdings and Snap Inc 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..