Correlation Between G Bits and Harbin Air

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

Diversification Opportunities for G Bits and Harbin Air

-0.04

Correlation Coefficient

G Bits  Harbin Air

Good diversification

The 3 months correlation between 603444 and Harbin is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding G bits Network Technology and Harbin Air Conditioning in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbin Air Conditioning 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 Harbin Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbin Air Conditioning has no effect on the direction of G Bits i.e., G Bits and Harbin Air go up and down completely randomly.

Pair Corralation between G Bits and Harbin Air

Assuming the 90 days trading horizon G bits Network Technology is expected to generate 0.81 times more return on investment than Harbin Air. However, G bits Network Technology is 1.23 times less risky than Harbin Air. It trades about 0.22 of its potential returns per unit of risk. Harbin Air Conditioning is currently generating about -0.2 per unit of risk. If you would invest  19,770  in G bits Network Technology on September 27, 2024 and sell it today you would earn a total of  2,315  from holding G bits Network Technology or generate 11.71% return on investment over 90 days.

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

G bits Network Technology  vs.  Harbin Air Conditioning

G bits Network

Risk-Adjusted Performance

1 of 100

Weak

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

Harbin Air Conditioning

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with G Bits and Harbin Air

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

The idea behind G bits Network Technology and Harbin Air Conditioning 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.