Correlation Between DouYu International and Telephone

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

Diversification Opportunities for DouYu International and Telephone

0.35

Correlation Coefficient

DouYu International  Telephone

Weak diversification

The 3 months correlation between DouYu and Telephone is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding DouYu International Holdings and Telephone and Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telephone and Data 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 Telephone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telephone and Data has no effect on the direction of DouYu International i.e., DouYu International and Telephone go up and down completely randomly.

Pair Corralation between DouYu International and Telephone

Given the investment horizon of 90 days DouYu International Holdings is expected to under-perform the Telephone. In addition to that, DouYu International is 7.0 times more volatile than Telephone and Data. It trades about -0.01 of its total potential returns per unit of risk. Telephone and Data is currently generating about 0.12 per unit of volatility. If you would invest  1,890  in Telephone and Data on December 30, 2024 and sell it today you would earn a total of  177.00  from holding Telephone and Data or generate 9.37% return on investment over 90 days.

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

DouYu International Holdings  vs.  Telephone and Data

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 latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Telephone and Data

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Telephone and Data are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Telephone may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with DouYu International and Telephone

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

The idea behind DouYu International Holdings and Telephone and Data 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.