Correlation Between DouYu International and Zillow

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

Diversification Opportunities for DouYu International and Zillow

0.54

Correlation Coefficient

DouYu International  Zillow

Very weak diversification

The 3 months correlation between DouYu and Zillow is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding DouYu International Holdings and Zillow Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zillow Group 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 Zillow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zillow Group has no effect on the direction of DouYu International i.e., DouYu International and Zillow go up and down completely randomly.

Pair Corralation between DouYu International and Zillow

Given the investment horizon of 90 days DouYu International is expected to generate 1.86 times less return on investment than Zillow. In addition to that, DouYu International is 2.71 times more volatile than Zillow Group. It trades about 0.04 of its total potential returns per unit of risk. Zillow Group is currently generating about 0.2 per unit of volatility. If you would invest  7,320  in Zillow Group on September 12, 2024 and sell it today you would earn a total of  559.00  from holding Zillow Group or generate 7.64% 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.  Zillow Group

DouYu International

Risk-Adjusted Performance

13 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DouYu International Holdings are ranked lower than 13 (%) 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.

Zillow Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zillow Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, Zillow reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DouYu International and Zillow

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

The idea behind DouYu International Holdings and Zillow Group 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.