Correlation Between G Bits and Air China

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

Diversification Opportunities for G Bits and Air China

-0.17

Correlation Coefficient

G Bits  Air China

Good diversification

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

Pair Corralation between G Bits and Air China

Assuming the 90 days trading horizon G bits Network Technology is expected to under-perform the Air China. In addition to that, G Bits is 1.65 times more volatile than Air China Ltd. It trades about -0.02 of its total potential returns per unit of risk. Air China Ltd is currently generating about -0.03 per unit of volatility. If you would invest  1,064  in Air China Ltd on October 9, 2024 and sell it today you would lose (306.00) from holding Air China Ltd or give up 28.76% of portfolio value over 90 days.

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

G bits Network Technology  vs.  Air China Ltd

G bits Network

Risk-Adjusted Performance

0 of 100

Very 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 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.

Air China

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Air China Ltd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Air China may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with G Bits and Air China

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

The idea behind G bits Network Technology and Air China Ltd 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.