Correlation Between Shenzhen Overseas and G Bits

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

By analyzing existing cross correlation between Shenzhen Overseas Chinese and G bits Network Technology, you can compare the effects of market volatilities on Shenzhen Overseas and G Bits 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 Shenzhen Overseas with a short position of G Bits. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Overseas and G Bits.

Diversification Opportunities for Shenzhen Overseas and G Bits

0.32

Correlation Coefficient

Shenzhen Overseas  G Bits

Weak diversification

The 3 months correlation between Shenzhen and 603444 is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Overseas Chinese and G bits Network Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G bits Network and Shenzhen Overseas 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 Shenzhen Overseas Chinese are associated (or correlated) with G Bits. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G bits Network has no effect on the direction of Shenzhen Overseas i.e., Shenzhen Overseas and G Bits go up and down completely randomly.

Pair Corralation between Shenzhen Overseas and G Bits

Assuming the 90 days trading horizon Shenzhen Overseas Chinese is expected to under-perform the G Bits. In addition to that, Shenzhen Overseas is 1.04 times more volatile than G bits Network Technology. It trades about -0.08 of its total potential returns per unit of risk. G bits Network Technology is currently generating about 0.23 per unit of volatility. If you would invest  19,835  in G bits Network Technology on September 25, 2024 and sell it today you would earn a total of  2,314  from holding G bits Network Technology or generate 11.67% return on investment over 90 days.

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

Shenzhen Overseas Chinese  vs.  G bits Network Technology

Shenzhen Overseas Chinese

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Overseas Chinese are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Overseas sustained solid returns over the last few months and may actually be approaching a breakup point.

G bits Network

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in G bits Network Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, G Bits sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shenzhen Overseas and G Bits

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

The idea behind Shenzhen Overseas Chinese and G bits Network Technology 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 Stocks Directory module to find actively traded stocks across global markets.