Correlation Between DouYu International and Match

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

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

Diversification Opportunities for DouYu International and Match

-0.63

Correlation Coefficient

DouYu International  Match

Excellent diversification

The 3 months correlation between DouYu and Match is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding DouYu International Holdings and Match Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Match Group and DouYu International 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 DouYu International Holdings are associated (or correlated) with Match. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Match Group has no effect on the direction of DouYu International i.e., DouYu International and Match go up and down completely randomly.

Pair Corralation between DouYu International and Match

Given the investment horizon of 90 days DouYu International Holdings is expected to generate 1.63 times more return on investment than Match. However, DouYu International is 1.63 times more volatile than Match Group. It trades about 0.01 of its potential returns per unit of risk. Match Group is currently generating about -0.05 per unit of risk. If you would invest  1,260  in DouYu International Holdings on February 7, 2024 and sell it today you would lose (300.00) from holding DouYu International Holdings or give up 23.81% of portfolio value over 90 days.

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

DouYu International Holdings  vs.  Match Group

DouYu International

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DouYu International Holdings are ranked lower than 10 (%) 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.

Match Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Match Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with DouYu International and Match

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

The idea behind DouYu International Holdings and Match Group 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.