Correlation Between YY and MediaAlpha

Can any of the company-specific risk be diversified away by investing in both YY and MediaAlpha 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 MediaAlpha 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 MediaAlpha, you can compare the effects of market volatilities on YY and MediaAlpha 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 MediaAlpha. Check out your portfolio center. Please also check ongoing floating volatility patterns of YY and MediaAlpha.

Diversification Opportunities for YY and MediaAlpha

-0.24

Correlation Coefficient

YY  MediaAlpha

Very good diversification

The 3 months correlation between YY and MediaAlpha is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding YY Inc Class and MediaAlpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MediaAlpha 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 MediaAlpha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MediaAlpha has no effect on the direction of YY i.e., YY and MediaAlpha go up and down completely randomly.

Pair Corralation between YY and MediaAlpha

Allowing for the 90-day total investment horizon YY Inc Class is expected to generate 0.77 times more return on investment than MediaAlpha. However, YY Inc Class is 1.29 times less risky than MediaAlpha. It trades about 0.04 of its potential returns per unit of risk. MediaAlpha is currently generating about -0.03 per unit of risk. If you would invest  4,107  in YY Inc Class on December 28, 2024 and sell it today you would earn a total of  156.00  from holding YY Inc Class or generate 3.8% return on investment over 90 days.

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

YY Inc Class  vs.  MediaAlpha

YY Inc Class

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in YY Inc Class are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, YY may actually be approaching a critical reversion point that can send shares even higher in April 2025.

MediaAlpha

Risk-Adjusted Performance

Very Weak

Over the last 90 days MediaAlpha has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with YY and MediaAlpha

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

The idea behind YY Inc Class and MediaAlpha 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.