Correlation Between G Bits and Shengda Mining

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

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

Diversification Opportunities for G Bits and Shengda Mining

-0.17

Correlation Coefficient

G Bits  Shengda Mining

Good diversification

The 3 months correlation between 603444 and Shengda is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding G bits Network Technology and Shengda Mining Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shengda Mining and G Bits 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 G bits Network Technology are associated (or correlated) with Shengda Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shengda Mining has no effect on the direction of G Bits i.e., G Bits and Shengda Mining go up and down completely randomly.

Pair Corralation between G Bits and Shengda Mining

Assuming the 90 days trading horizon G bits Network Technology is expected to under-perform the Shengda Mining. But the stock apears to be less risky and, when comparing its historical volatility, G bits Network Technology is 1.11 times less risky than Shengda Mining. The stock trades about -0.02 of its potential returns per unit of risk. The Shengda Mining Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,283  in Shengda Mining Co on September 26, 2024 and sell it today you would lose (73.00) from holding Shengda Mining Co or give up 5.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

G bits Network Technology  vs.  Shengda Mining Co

G bits Network

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in G bits Network Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, G Bits may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Shengda Mining

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shengda Mining Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shengda Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with G Bits and Shengda Mining

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

The idea behind G bits Network Technology and Shengda Mining Co 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.