Correlation Between G-bits Network and Zotye Automobile

Can any of the company-specific risk be diversified away by investing in both G-bits Network and Zotye Automobile 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 Network and Zotye Automobile 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 Zotye Automobile Co, you can compare the effects of market volatilities on G-bits Network and Zotye Automobile 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 Network with a short position of Zotye Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of G-bits Network and Zotye Automobile.

Diversification Opportunities for G-bits Network and Zotye Automobile

0.26

Correlation Coefficient

G-bits Network  Zotye Automobile

Modest diversification

The 3 months correlation between G-bits and Zotye is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding G bits Network Technology and Zotye Automobile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zotye Automobile and G-bits Network 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 Zotye Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zotye Automobile has no effect on the direction of G-bits Network i.e., G-bits Network and Zotye Automobile go up and down completely randomly.

Pair Corralation between G-bits Network and Zotye Automobile

Assuming the 90 days trading horizon G bits Network Technology is expected to generate 0.55 times more return on investment than Zotye Automobile. However, G bits Network Technology is 1.83 times less risky than Zotye Automobile. It trades about 0.01 of its potential returns per unit of risk. Zotye Automobile Co is currently generating about -0.03 per unit of risk. If you would invest  22,085  in G bits Network Technology on December 25, 2024 and sell it today you would lose (85.00) from holding G bits Network Technology or give up 0.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.28%
Values	Daily Returns

G bits Network Technology  vs.  Zotye Automobile Co

G bits Network

Risk-Adjusted Performance

Weak

Over the last 90 days G bits Network Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, G-bits Network is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Zotye Automobile

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zotye Automobile Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with G-bits Network and Zotye Automobile

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

The idea behind G bits Network Technology and Zotye Automobile 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.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.