Correlation Between IAC and DouYu International

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

Diversification Opportunities for IAC and DouYu International

-0.18
  Correlation Coefficient

Good diversification

The 3 months correlation between IAC and DouYu is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding IAC Inc and DouYu International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DouYu International and IAC 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 IAC Inc 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 IAC i.e., IAC and DouYu International go up and down completely randomly.

Pair Corralation between IAC and DouYu International

Considering the 90-day investment horizon IAC Inc is expected to generate 0.59 times more return on investment than DouYu International. However, IAC Inc is 1.71 times less risky than DouYu International. It trades about -0.03 of its potential returns per unit of risk. DouYu International Holdings is currently generating about -0.03 per unit of risk. If you would invest  9,860  in IAC Inc on December 30, 2023 and sell it today you would lose (4,525) from holding IAC Inc or give up 45.89% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

IAC Inc  vs.  DouYu International Holdings

 Performance 
       Timeline  
IAC Inc 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in IAC Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, IAC is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
DouYu International 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
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 weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

IAC and DouYu International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IAC and DouYu International

The main advantage of trading using opposite IAC and DouYu International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IAC 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 IAC Inc 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.
Check out your portfolio center.
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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.

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