Correlation Between Hollywall Entertainment and HUYA

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

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

Diversification Opportunities for Hollywall Entertainment and HUYA

0.12

Correlation Coefficient

Hollywall Entertainment  HUYA

Average diversification

The 3 months correlation between Hollywall and HUYA is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Hollywall Entertainment and HUYA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUYA Inc and Hollywall Entertainment 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 Hollywall Entertainment are associated (or correlated) with HUYA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUYA Inc has no effect on the direction of Hollywall Entertainment i.e., Hollywall Entertainment and HUYA go up and down completely randomly.

Pair Corralation between Hollywall Entertainment and HUYA

Given the investment horizon of 90 days Hollywall Entertainment is expected to generate 4.4 times more return on investment than HUYA. However, Hollywall Entertainment is 4.4 times more volatile than HUYA Inc. It trades about 0.05 of its potential returns per unit of risk. HUYA Inc is currently generating about 0.17 per unit of risk. If you would invest  3.90  in Hollywall Entertainment on February 28, 2024 and sell it today you would lose (1.20) from holding Hollywall Entertainment or give up 30.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Hollywall Entertainment  vs.  HUYA Inc

Hollywall Entertainment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hollywall Entertainment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Hollywall Entertainment disclosed solid returns over the last few months and may actually be approaching a breakup point.

HUYA Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HUYA Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, HUYA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hollywall Entertainment and HUYA

The main advantage of trading using opposite Hollywall Entertainment and HUYA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hollywall Entertainment position performs unexpectedly, HUYA 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 HUYA will offset losses from the drop in HUYA's long position.

The idea behind Hollywall Entertainment and HUYA Inc 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.

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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.