Correlation Between WEBTOON Entertainment and DouYu International

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

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

Diversification Opportunities for WEBTOON Entertainment and DouYu International

0.58

Correlation Coefficient

WEBTOON Entertainment  DouYu International

Very weak diversification

The 3 months correlation between WEBTOON and DouYu is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding WEBTOON Entertainment Common and DouYu International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DouYu International and WEBTOON Entertainment 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 WEBTOON Entertainment Common 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 WEBTOON Entertainment i.e., WEBTOON Entertainment and DouYu International go up and down completely randomly.

Pair Corralation between WEBTOON Entertainment and DouYu International

Given the investment horizon of 90 days WEBTOON Entertainment Common is expected to under-perform the DouYu International. But the stock apears to be less risky and, when comparing its historical volatility, WEBTOON Entertainment Common is 1.31 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 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,099  in DouYu International Holdings on September 26, 2024 and sell it today you would earn a total of  2.00  from holding DouYu International Holdings or generate 0.18% return on investment over 90 days.

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

WEBTOON Entertainment Common  vs.  DouYu International Holdings

WEBTOON Entertainment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WEBTOON Entertainment Common are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, WEBTOON Entertainment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

DouYu International

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DouYu International Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, DouYu International unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WEBTOON Entertainment and DouYu International

The main advantage of trading using opposite WEBTOON Entertainment and DouYu International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WEBTOON Entertainment 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 WEBTOON Entertainment Common 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.