Correlation Between Zillow and DouYu International

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

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

Diversification Opportunities for Zillow and DouYu International

-0.21

Correlation Coefficient

Zillow  DouYu International

Very good diversification

The 3 months correlation between Zillow and DouYu is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Zillow Group and DouYu International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DouYu International and Zillow 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 Zillow Group 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 Zillow i.e., Zillow and DouYu International go up and down completely randomly.

Pair Corralation between Zillow and DouYu International

Allowing for the 90-day total investment horizon Zillow Group is expected to under-perform the DouYu International. In addition to that, Zillow is 1.25 times more volatile than DouYu International Holdings. It trades about -0.2 of its total potential returns per unit of risk. DouYu International Holdings is currently generating about 0.38 per unit of volatility. If you would invest  749.00  in DouYu International Holdings on January 30, 2024 and sell it today you would earn a total of  109.00  from holding DouYu International Holdings or generate 14.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Zillow Group  vs.  DouYu International Holdings

Zillow Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zillow Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

DouYu International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DouYu International Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, DouYu International unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zillow and DouYu International

The main advantage of trading using opposite Zillow and DouYu International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zillow 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 Zillow Group 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.