Correlation Between Reading International and HUYA

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

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

Diversification Opportunities for Reading International and HUYA

-0.41

Correlation Coefficient

Reading International  HUYA

Very good diversification

The 3 months correlation between Reading and HUYA is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Reading International and HUYA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUYA Inc and Reading 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 Reading International 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 Reading International i.e., Reading International and HUYA go up and down completely randomly.

Pair Corralation between Reading International and HUYA

Considering the 90-day investment horizon Reading International is expected to under-perform the HUYA. But the stock apears to be less risky and, when comparing its historical volatility, Reading International is 1.65 times less risky than HUYA. The stock trades about -0.04 of its potential returns per unit of risk. The HUYA Inc is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  349.00  in HUYA Inc on February 28, 2024 and sell it today you would earn a total of  195.50  from holding HUYA Inc or generate 56.02% return on investment over 90 days.

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

Reading International  vs.  HUYA Inc

Reading International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reading International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

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 Reading International and HUYA

The main advantage of trading using opposite Reading International and HUYA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reading International 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 Reading International 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.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.