Correlation Between YY and Kuaishou Technology

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Can any of the company-specific risk be diversified away by investing in both YY and Kuaishou Technology 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 YY and Kuaishou Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between YY Inc Class and Kuaishou Technology, you can compare the effects of market volatilities on YY and Kuaishou Technology 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 YY with a short position of Kuaishou Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of YY and Kuaishou Technology.

Diversification Opportunities for YY and Kuaishou Technology

YYKuaishouDiversified AwayYYKuaishouDiversified Away100%
0.33
  Correlation Coefficient

Weak diversification

The 3 months correlation between YY and Kuaishou is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding YY Inc Class and Kuaishou Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuaishou Technology and YY 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 YY Inc Class are associated (or correlated) with Kuaishou Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kuaishou Technology has no effect on the direction of YY i.e., YY and Kuaishou Technology go up and down completely randomly.

Pair Corralation between YY and Kuaishou Technology

Allowing for the 90-day total investment horizon YY is expected to generate 2.32 times less return on investment than Kuaishou Technology. But when comparing it to its historical volatility, YY Inc Class is 3.25 times less risky than Kuaishou Technology. It trades about 0.25 of its potential returns per unit of risk. Kuaishou Technology is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  539.00  in Kuaishou Technology on November 28, 2024 and sell it today you would earn a total of  161.00  from holding Kuaishou Technology or generate 29.87% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

YY Inc Class  vs.  Kuaishou Technology

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50510152025
JavaScript chart by amCharts 3.21.15YY KUASF
       Timeline  
YY Inc Class 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in YY Inc Class are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, YY showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb35404550
Kuaishou Technology 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Kuaishou Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Kuaishou Technology reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15JanFebFeb55.566.577.5

YY and Kuaishou Technology Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-9.89-7.41-4.93-2.440.02.565.257.9410.6313.32 0.0150.0200.0250.0300.035
JavaScript chart by amCharts 3.21.15YY KUASF
       Returns  

Pair Trading with YY and Kuaishou Technology

The main advantage of trading using opposite YY and Kuaishou Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YY position performs unexpectedly, Kuaishou Technology 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 Kuaishou Technology will offset losses from the drop in Kuaishou Technology's long position.
The idea behind YY Inc Class and Kuaishou Technology 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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