Correlation Between IZEA and DouYu International

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

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

Diversification Opportunities for IZEA and DouYu International

-0.24

Correlation Coefficient

IZEA  DouYu International

Very good diversification

The 3 months correlation between IZEA and DouYu is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding IZEA Inc and DouYu International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DouYu International and IZEA 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 IZEA Inc 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 IZEA i.e., IZEA and DouYu International go up and down completely randomly.

Pair Corralation between IZEA and DouYu International

Given the investment horizon of 90 days IZEA Inc is expected to generate 0.73 times more return on investment than DouYu International. However, IZEA Inc is 1.38 times less risky than DouYu International. It trades about 0.16 of its potential returns per unit of risk. DouYu International Holdings is currently generating about 0.04 per unit of risk. If you would invest  213.00  in IZEA Inc on August 31, 2024 and sell it today you would earn a total of  73.00  from holding IZEA Inc or generate 34.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

IZEA Inc  vs.  DouYu International Holdings

IZEA Inc

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IZEA Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, IZEA sustained solid returns over the last few months and may actually be approaching a breakup point.

DouYu International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DouYu International Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, DouYu International may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with IZEA and DouYu International

The main advantage of trading using opposite IZEA and DouYu International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IZEA 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 IZEA Inc 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.