Correlation Between Alphabet and DouYu International

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

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

Diversification Opportunities for Alphabet and DouYu International

0.76

Correlation Coefficient

Alphabet  DouYu International

Poor diversification

The 3 months correlation between Alphabet and DouYu is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class A and DouYu International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DouYu International and Alphabet 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 Alphabet Inc Class A 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 Alphabet i.e., Alphabet and DouYu International go up and down completely randomly.

Pair Corralation between Alphabet and DouYu International

Assuming the 90 days horizon Alphabet Inc Class A is expected to under-perform the DouYu International. But the stock apears to be less risky and, when comparing its historical volatility, Alphabet Inc Class A is 4.35 times less risky than DouYu International. The stock trades about -0.16 of its potential returns per unit of risk. The DouYu International Holdings is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,129  in DouYu International Holdings on December 30, 2024 and sell it today you would lose (371.00) from holding DouYu International Holdings or give up 32.86% of portfolio value over 90 days.

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

Alphabet Inc Class A  vs.  DouYu International Holdings

Alphabet Class A

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alphabet Inc Class A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional 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 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.

Pair Trading with Alphabet and DouYu International

The main advantage of trading using opposite Alphabet and DouYu International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet 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 Alphabet Inc Class A 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.