Correlation Between Hello and DouYu International

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

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

Diversification Opportunities for Hello and DouYu International

0.23

Correlation Coefficient

Hello  DouYu International

Modest diversification

The 3 months correlation between Hello and DouYu is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Hello Group and DouYu International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DouYu International and Hello 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 Hello Group 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 Hello i.e., Hello and DouYu International go up and down completely randomly.

Pair Corralation between Hello and DouYu International

Given the investment horizon of 90 days Hello Group is expected to generate 0.3 times more return on investment than DouYu International. However, Hello Group is 3.39 times less risky than DouYu International. It trades about 0.12 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  673.00  in Hello Group on November 28, 2024 and sell it today you would earn a total of  116.00  from holding Hello Group or generate 17.24% return on investment over 90 days.

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

Hello Group  vs.  DouYu International Holdings

Hello Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hello Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Hello displayed solid returns over the last few months and may actually be approaching a breakup point.

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 weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Hello and DouYu International

The main advantage of trading using opposite Hello and DouYu International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hello 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 Hello Group 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.