Correlation Between Gaia and DouYu International
Can any of the company-specific risk be diversified away by investing in both Gaia 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 Gaia and DouYu International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaia Inc and DouYu International Holdings, you can compare the effects of market volatilities on Gaia 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 Gaia with a short position of DouYu International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaia and DouYu International.
Diversification Opportunities for Gaia and DouYu International
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Gaia and DouYu is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Gaia Inc and DouYu International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DouYu International and Gaia 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 Gaia Inc 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 Gaia i.e., Gaia and DouYu International go up and down completely randomly.
Pair Corralation between Gaia and DouYu International
Given the investment horizon of 90 days Gaia Inc is expected to generate 1.26 times more return on investment than DouYu International. However, Gaia is 1.26 times more volatile than DouYu International Holdings. It trades about 0.36 of its potential returns per unit of risk. DouYu International Holdings is currently generating about 0.25 per unit of risk. If you would invest 291.00 in Gaia Inc on January 26, 2024 and sell it today you would earn a total of 111.00 from holding Gaia Inc or generate 38.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gaia Inc vs. DouYu International Holdings
Performance |
| Timeline |
| Gaia Inc |
| DouYu International |
Gaia and DouYu International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaia and DouYu International
The main advantage of trading using opposite Gaia and DouYu International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaia 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.| Gaia vs. Roku Inc | Gaia vs. Paramount Global Class | Gaia vs. Warner Bros Discovery | Gaia vs. Paramount Global Class |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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