Correlation Between G Bits and Eoptolink Technology

Can any of the company-specific risk be diversified away by investing in both G Bits and Eoptolink Technology 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 Eoptolink Technology 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 Eoptolink Technology, you can compare the effects of market volatilities on G Bits and Eoptolink Technology 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 Eoptolink Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of G Bits and Eoptolink Technology.

Diversification Opportunities for G Bits and Eoptolink Technology

0.73

Correlation Coefficient

G Bits  Eoptolink Technology

Poor diversification

The 3 months correlation between 603444 and Eoptolink is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding G bits Network Technology and Eoptolink Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eoptolink Technology 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 Eoptolink Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eoptolink Technology has no effect on the direction of G Bits i.e., G Bits and Eoptolink Technology go up and down completely randomly.

Pair Corralation between G Bits and Eoptolink Technology

Assuming the 90 days trading horizon G bits Network Technology is expected to under-perform the Eoptolink Technology. But the stock apears to be less risky and, when comparing its historical volatility, G bits Network Technology is 1.64 times less risky than Eoptolink Technology. The stock trades about -0.01 of its potential returns per unit of risk. The Eoptolink Technology is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,681  in Eoptolink Technology on September 19, 2024 and sell it today you would earn a total of  11,689  from holding Eoptolink Technology or generate 695.36% return on investment over 90 days.

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

G bits Network Technology  vs.  Eoptolink Technology

G bits Network

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in G bits Network Technology are ranked lower than 4 (%) 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.

Eoptolink Technology

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eoptolink Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Eoptolink Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with G Bits and Eoptolink Technology

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

The idea behind G bits Network Technology and Eoptolink 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.