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

0.31

Correlation Coefficient

Hello  DouYu International

Weak diversification

The 3 months correlation between Hello and DouYu is 0.31. 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 under-perform the DouYu International. But the stock apears to be less risky and, when comparing its historical volatility, Hello Group is 3.25 times less risky than DouYu International. The stock trades about -0.05 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 28, 2024 and sell it today you would lose (357.00) from holding DouYu International Holdings or give up 31.62% of portfolio value 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

Very Weak

Over the last 90 days Hello Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm 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 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.