Correlation Between G Bits and Shanghai CEO

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

Diversification Opportunities for G Bits and Shanghai CEO

0.2

Correlation Coefficient

G Bits  Shanghai CEO

Modest diversification

The 3 months correlation between 603444 and Shanghai is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding G bits Network Technology and Shanghai CEO Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai CEO Environ 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 Shanghai CEO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai CEO Environ has no effect on the direction of G Bits i.e., G Bits and Shanghai CEO go up and down completely randomly.

Pair Corralation between G Bits and Shanghai CEO

Assuming the 90 days trading horizon G bits Network Technology is expected to under-perform the Shanghai CEO. But the stock apears to be less risky and, when comparing its historical volatility, G bits Network Technology is 15.8 times less risky than Shanghai CEO. The stock trades about -0.02 of its potential returns per unit of risk. The Shanghai CEO Environmental is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,136  in Shanghai CEO Environmental on September 27, 2024 and sell it today you would lose (1,281) from holding Shanghai CEO Environmental or give up 59.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

G bits Network Technology  vs.  Shanghai CEO Environmental

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.

Shanghai CEO Environ

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai CEO Environmental are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shanghai CEO 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 Shanghai CEO

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

The idea behind G bits Network Technology and Shanghai CEO Environmental 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 CEOs Directory module to screen CEOs from public companies around the world.