Correlation Between SohuCom and Doubledown Interactive

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

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

Diversification Opportunities for SohuCom and Doubledown Interactive

-0.21

Correlation Coefficient

SohuCom  Doubledown Interactive

Very good diversification

The 3 months correlation between SohuCom and Doubledown is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding SohuCom and Doubledown Interactive Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doubledown Interactive and SohuCom 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 SohuCom are associated (or correlated) with Doubledown Interactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doubledown Interactive has no effect on the direction of SohuCom i.e., SohuCom and Doubledown Interactive go up and down completely randomly.

Pair Corralation between SohuCom and Doubledown Interactive

Given the investment horizon of 90 days SohuCom is expected to under-perform the Doubledown Interactive. But the stock apears to be less risky and, when comparing its historical volatility, SohuCom is 1.4 times less risky than Doubledown Interactive. The stock trades about -0.08 of its potential returns per unit of risk. The Doubledown Interactive Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,403  in Doubledown Interactive Co on August 31, 2024 and sell it today you would lose (3.00) from holding Doubledown Interactive Co or give up 0.21% of portfolio value over 90 days.

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

SohuCom  vs.  Doubledown Interactive Co

SohuCom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SohuCom has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Doubledown Interactive

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Doubledown Interactive Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, Doubledown Interactive is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with SohuCom and Doubledown Interactive

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

The idea behind SohuCom and Doubledown Interactive Co 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.