Correlation Between Alphabet Class and DouYu International

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

Diversification Opportunities for Alphabet Class and DouYu International

  Correlation Coefficient

Good diversification

The 3 months correlation between Alphabet and DouYu is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Class A and DouYu International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DouYu International and Alphabet Class 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 Alphabet Class A 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 Alphabet Class i.e., Alphabet Class and DouYu International go up and down completely randomly.

Pair Corralation between Alphabet Class and DouYu International

Assuming the 90 days horizon Alphabet Class A is expected to generate 0.53 times more return on investment than DouYu International. However, Alphabet Class A is 1.9 times less risky than DouYu International. It trades about -0.05 of its potential returns per unit of risk. DouYu International Holdings is currently generating about -0.21 per unit of risk. If you would invest  13,237  in Alphabet Class A on June 24, 2023 and sell it today you would lose (193.00) from holding Alphabet Class A or give up 1.46% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
ValuesDaily Returns

Alphabet Class A  vs.  DouYu International Holdings

Alphabet Class A 

Alphabet Performance

8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Class A are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Alphabet Class may actually be approaching a critical reversion point that can send shares even higher in October 2023.
DouYu International 

DouYu Performance

0 of 100
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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Alphabet Class and DouYu International Volatility Contrast

   Predicted Return Density   

Pair Trading with Alphabet Class and DouYu International

The main advantage of trading using opposite Alphabet Class and DouYu International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet Class 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 Alphabet Class A 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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