Correlation Between Jianpu Technology and DouYu International

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

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

Diversification Opportunities for Jianpu Technology and DouYu International

0.44

Correlation Coefficient

Jianpu Technology  DouYu International

Very weak diversification

The 3 months correlation between Jianpu and DouYu is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Jianpu Technology and DouYu International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DouYu International and Jianpu Technology 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 Jianpu Technology 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 Jianpu Technology i.e., Jianpu Technology and DouYu International go up and down completely randomly.

Pair Corralation between Jianpu Technology and DouYu International

Allowing for the 90-day total investment horizon Jianpu Technology is expected to under-perform the DouYu International. In addition to that, Jianpu Technology is 1.56 times more volatile than DouYu International Holdings. It trades about -0.01 of its total potential returns per unit of risk. DouYu International Holdings is currently generating about -0.01 per unit of volatility. If you would invest  1,030  in DouYu International Holdings on January 20, 2024 and sell it today you would lose (227.00) from holding DouYu International Holdings or give up 22.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	83.53%
Values	Daily Returns

Jianpu Technology  vs.  DouYu International Holdings

Jianpu Technology

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Jianpu Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, Jianpu Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

DouYu International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DouYu International Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, DouYu International may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Jianpu Technology and DouYu International

The main advantage of trading using opposite Jianpu Technology and DouYu International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jianpu Technology 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 Jianpu Technology 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..