Correlation Between TuanChe ADR and DouYu International

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

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

Diversification Opportunities for TuanChe ADR and DouYu International

0.38

Correlation Coefficient

TuanChe ADR  DouYu International

Weak diversification

The 3 months correlation between TuanChe and DouYu is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding TuanChe ADR and DouYu International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DouYu International and TuanChe ADR 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 TuanChe ADR 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 TuanChe ADR i.e., TuanChe ADR and DouYu International go up and down completely randomly.

Pair Corralation between TuanChe ADR and DouYu International

Allowing for the 90-day total investment horizon TuanChe ADR is expected to under-perform the DouYu International. But the stock apears to be less risky and, when comparing its historical volatility, TuanChe ADR is 1.81 times less risky than DouYu International. The stock trades about -0.1 of its potential returns per unit of risk. The DouYu International Holdings is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,130  in DouYu International Holdings on December 27, 2024 and sell it today you would lose (323.00) from holding DouYu International Holdings or give up 28.58% of portfolio value over 90 days.

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

TuanChe ADR  vs.  DouYu International Holdings

TuanChe ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days TuanChe ADR 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 fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 TuanChe ADR and DouYu International

The main advantage of trading using opposite TuanChe ADR and DouYu International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TuanChe ADR 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 TuanChe ADR 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.