Correlation Between Shenwu Energy and G Bits

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

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

Diversification Opportunities for Shenwu Energy and G Bits

0.02

Correlation Coefficient

Shenwu Energy  G Bits

Significant diversification

The 3 months correlation between Shenwu and 603444 is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Shenwu Energy Saving 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 Shenwu Energy 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 Shenwu Energy Saving 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 Shenwu Energy i.e., Shenwu Energy and G Bits go up and down completely randomly.

Pair Corralation between Shenwu Energy and G Bits

Assuming the 90 days trading horizon Shenwu Energy Saving is expected to generate 1.14 times more return on investment than G Bits. However, Shenwu Energy is 1.14 times more volatile than G bits Network Technology. It trades about 0.0 of its potential returns per unit of risk. G bits Network Technology is currently generating about -0.01 per unit of risk. If you would invest  472.00  in Shenwu Energy Saving on September 22, 2024 and sell it today you would lose (81.00) from holding Shenwu Energy Saving or give up 17.16% of portfolio value over 90 days.

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

Shenwu Energy Saving  vs.  G bits Network Technology

Shenwu Energy Saving

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shenwu Energy Saving are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenwu Energy sustained solid returns over the last few months and may actually be approaching a breakup point.

G bits Network

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in G bits Network Technology are ranked lower than 6 (%) 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 Shenwu Energy and G Bits

The main advantage of trading using opposite Shenwu Energy and G Bits positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenwu Energy 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 Shenwu Energy Saving 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.