Correlation Between DouYu International and DoorDash

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

Diversification Opportunities for DouYu International and DoorDash

-0.5

Correlation Coefficient

DouYu International  DoorDash

Very good diversification

The 3 months correlation between DouYu and DoorDash is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding DouYu International Holdings and DoorDash Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DoorDash Class A 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 DoorDash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DoorDash Class A has no effect on the direction of DouYu International i.e., DouYu International and DoorDash go up and down completely randomly.

Pair Corralation between DouYu International and DoorDash

Given the investment horizon of 90 days DouYu International is expected to generate 6.04 times less return on investment than DoorDash. In addition to that, DouYu International is 1.72 times more volatile than DoorDash Class A. It trades about 0.01 of its total potential returns per unit of risk. DoorDash Class A is currently generating about 0.15 per unit of volatility. If you would invest  10,633  in DoorDash Class A on January 19, 2024 and sell it today you would earn a total of  2,457  from holding DoorDash Class A or generate 23.11% return on investment over 90 days.

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

DouYu International Holdings  vs.  DoorDash Class A

DouYu International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DouYu International Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, DouYu International is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

DoorDash Class A

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DoorDash Class A are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, DoorDash demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DouYu International and DoorDash

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

The idea behind DouYu International Holdings and DoorDash Class A 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.