Correlation Between The9 and Doubledown InteractiveCo
Can any of the company-specific risk be diversified away by investing in both The9 and Doubledown InteractiveCo 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 The9 and Doubledown InteractiveCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The9 Ltd ADR and Doubledown InteractiveCo, you can compare the effects of market volatilities on The9 and Doubledown InteractiveCo 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 The9 with a short position of Doubledown InteractiveCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of The9 and Doubledown InteractiveCo.
Diversification Opportunities for The9 and Doubledown InteractiveCo
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between The9 and Doubledown is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding The9 Ltd ADR and Doubledown InteractiveCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doubledown InteractiveCo and The9 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 The9 Ltd ADR are associated (or correlated) with Doubledown InteractiveCo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doubledown InteractiveCo has no effect on the direction of The9 i.e., The9 and Doubledown InteractiveCo go up and down completely randomly.
Pair Corralation between The9 and Doubledown InteractiveCo
Given the investment horizon of 90 days The9 is expected to generate 2.57 times less return on investment than Doubledown InteractiveCo. But when comparing it to its historical volatility, The9 Ltd ADR is 1.0 times less risky than Doubledown InteractiveCo. It trades about 0.06 of its potential returns per unit of risk. Doubledown InteractiveCo is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,049 in Doubledown InteractiveCo on March 2, 2024 and sell it today you would earn a total of 186.00 from holding Doubledown InteractiveCo or generate 17.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
The9 Ltd ADR vs. Doubledown InteractiveCo
Performance |
Timeline |
The9 Ltd ADR |
Doubledown InteractiveCo |
The9 and Doubledown InteractiveCo Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with The9 and Doubledown InteractiveCo
The main advantage of trading using opposite The9 and Doubledown InteractiveCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The9 position performs unexpectedly, Doubledown InteractiveCo 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 Doubledown InteractiveCo will offset losses from the drop in Doubledown InteractiveCo's long position.The idea behind The9 Ltd ADR and Doubledown InteractiveCo 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.Doubledown InteractiveCo vs. i3 Interactive | Doubledown InteractiveCo vs. GameSquare Holdings | Doubledown InteractiveCo vs. Playstudios | Doubledown InteractiveCo vs. Snail Class A |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
Fundamental Analysis View fundamental data based on most recent published financial statements | |
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |