Correlation Between Golden Grail and DouYu International

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

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

Diversification Opportunities for Golden Grail and DouYu International

0.51

Correlation Coefficient

Golden Grail  DouYu International

Very weak diversification

The 3 months correlation between Golden and DouYu is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Golden Grail Technology and DouYu International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DouYu International and Golden Grail 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 Golden Grail Technology are associated (or correlated) with DouYu International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DouYu International has no effect on the direction of Golden Grail i.e., Golden Grail and DouYu International go up and down completely randomly.

Pair Corralation between Golden Grail and DouYu International

Given the investment horizon of 90 days Golden Grail Technology is expected to under-perform the DouYu International. In addition to that, Golden Grail is 1.17 times more volatile than DouYu International Holdings. It trades about -0.01 of its total potential returns per unit of risk. DouYu International Holdings is currently generating about 0.0 per unit of volatility. If you would invest  1,130  in DouYu International Holdings on December 27, 2024 and sell it today you would lose (323.00) from holding DouYu International Holdings or give up 28.58% of portfolio value over 90 days.

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

Golden Grail Technology  vs.  DouYu International Holdings

Golden Grail Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Golden Grail Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Golden Grail is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Golden Grail and DouYu International

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

The idea behind Golden Grail Technology and DouYu International 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.