Correlation Between Douyu International and Genius Sports

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

Diversification Opportunities for Douyu International and Genius Sports

0.9
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Douyu and Genius is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Douyu International Holdings and Genius Sports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genius Sports 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 Genius Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genius Sports has no effect on the direction of Douyu International i.e., Douyu International and Genius Sports go up and down completely randomly.

Pair Corralation between Douyu International and Genius Sports

Given the investment horizon of 90 days Douyu International Holdings is expected to generate 0.63 times more return on investment than Genius Sports. However, Douyu International Holdings is 1.58 times less risky than Genius Sports. It trades about 0.01 of its potential returns per unit of risk. Genius Sports is currently generating about -0.11 per unit of risk. If you would invest  127.00  in Douyu International Holdings on April 3, 2022 and sell it today you would lose (1.00)  from holding Douyu International Holdings or give up 0.79% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Douyu International Holdings  vs.  Genius Sports

 Performance (%) 
      Timeline 
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 sluggish performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in August 2022. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Douyu Price Channel

Genius Sports 
Genius Performance
0 of 100
Over the last 90 days Genius Sports has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in August 2022. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Genius Price Channel

Douyu International and Genius Sports Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Douyu International and Genius Sports

The main advantage of trading using opposite Douyu International and Genius Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Douyu International position performs unexpectedly, Genius Sports 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 Genius Sports will offset losses from the drop in Genius Sports' long position.
The idea behind Douyu International Holdings and Genius Sports 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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