Correlation Between Liberty Media and HUYA

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

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

Diversification Opportunities for Liberty Media and HUYA

-0.37

Correlation Coefficient

Liberty Media  HUYA

Very good diversification

The 3 months correlation between Liberty and HUYA is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Media and HUYA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUYA Inc and Liberty Media 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 Liberty Media are associated (or correlated) with HUYA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUYA Inc has no effect on the direction of Liberty Media i.e., Liberty Media and HUYA go up and down completely randomly.

Pair Corralation between Liberty Media and HUYA

Assuming the 90 days horizon Liberty Media is expected to generate 0.52 times more return on investment than HUYA. However, Liberty Media is 1.94 times less risky than HUYA. It trades about 0.45 of its potential returns per unit of risk. HUYA Inc is currently generating about 0.04 per unit of risk. If you would invest  4,002  in Liberty Media on September 12, 2024 and sell it today you would earn a total of  3,084  from holding Liberty Media or generate 77.06% return on investment over 90 days.

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

Liberty Media  vs.  HUYA Inc

Liberty Media

Risk-Adjusted Performance

35 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Media are ranked lower than 35 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Liberty Media disclosed solid returns over the last few months and may actually be approaching a breakup point.

HUYA Inc

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HUYA Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, HUYA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Liberty Media and HUYA

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

The idea behind Liberty Media and HUYA Inc 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.