Correlation Between MediaAlpha and DouYu International

Can any of the company-specific risk be diversified away by investing in both MediaAlpha 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 MediaAlpha and DouYu International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MediaAlpha and DouYu International Holdings, you can compare the effects of market volatilities on MediaAlpha 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 MediaAlpha with a short position of DouYu International. Check out your portfolio center. Please also check ongoing floating volatility patterns of MediaAlpha and DouYu International.

Diversification Opportunities for MediaAlpha and DouYu International

-0.12

Correlation Coefficient

MediaAlpha  DouYu International

Good diversification

The 3 months correlation between MediaAlpha and DouYu is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding MediaAlpha and DouYu International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DouYu International and MediaAlpha 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 MediaAlpha 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 MediaAlpha i.e., MediaAlpha and DouYu International go up and down completely randomly.

Pair Corralation between MediaAlpha and DouYu International

Considering the 90-day investment horizon MediaAlpha is expected to under-perform the DouYu International. In addition to that, MediaAlpha is 1.04 times more volatile than DouYu International Holdings. It trades about -0.07 of its total potential returns per unit of risk. DouYu International Holdings is currently generating about 0.09 per unit of volatility. If you would invest  938.00  in DouYu International Holdings on September 2, 2024 and sell it today you would earn a total of  206.00  from holding DouYu International Holdings or generate 21.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

MediaAlpha  vs.  DouYu International Holdings

MediaAlpha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MediaAlpha has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

DouYu International

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DouYu International Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, DouYu International unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MediaAlpha and DouYu International

The main advantage of trading using opposite MediaAlpha and DouYu International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MediaAlpha 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 MediaAlpha 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..