Correlation Between DouYu International and Meta Platforms

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

Diversification Opportunities for DouYu International and Meta Platforms

-0.47

Correlation Coefficient

DouYu International  Meta Platforms

Very good diversification

The 3 months correlation between DouYu and Meta is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding DouYu International Holdings and Meta Platforms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms 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 Meta Platforms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Platforms has no effect on the direction of DouYu International i.e., DouYu International and Meta Platforms go up and down completely randomly.

Pair Corralation between DouYu International and Meta Platforms

If you would invest  789.00  in DouYu International Holdings on January 25, 2024 and sell it today you would earn a total of  68.00  from holding DouYu International Holdings or generate 8.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

DouYu International Holdings  vs.  Meta Platforms

DouYu International

Risk-Adjusted Performance

0 of 100

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 comparatively stable basic indicators, DouYu International is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Meta Platforms

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Meta Platforms has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Meta Platforms is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with DouYu International and Meta Platforms

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

The idea behind DouYu International Holdings and Meta Platforms 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.