Correlation Between Shenzhen Transsion and G Bits

Can any of the company-specific risk be diversified away by investing in both Shenzhen Transsion and G Bits 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 Shenzhen Transsion and G Bits into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shenzhen Transsion Holdings and G bits Network Technology, you can compare the effects of market volatilities on Shenzhen Transsion and G Bits 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 Shenzhen Transsion with a short position of G Bits. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Transsion and G Bits.

Diversification Opportunities for Shenzhen Transsion and G Bits

0.6

Correlation Coefficient

Shenzhen Transsion  G Bits

Poor diversification

The 3 months correlation between Shenzhen and 603444 is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Transsion Holdings and G bits Network Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G bits Network and Shenzhen Transsion 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 Shenzhen Transsion Holdings are associated (or correlated) with G Bits. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G bits Network has no effect on the direction of Shenzhen Transsion i.e., Shenzhen Transsion and G Bits go up and down completely randomly.

Pair Corralation between Shenzhen Transsion and G Bits

Assuming the 90 days trading horizon Shenzhen Transsion is expected to generate 2.91 times less return on investment than G Bits. In addition to that, Shenzhen Transsion is 1.34 times more volatile than G bits Network Technology. It trades about 0.01 of its total potential returns per unit of risk. G bits Network Technology is currently generating about 0.04 per unit of volatility. If you would invest  20,998  in G bits Network Technology on December 2, 2024 and sell it today you would earn a total of  405.00  from holding G bits Network Technology or generate 1.93% return on investment over 90 days.

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

Shenzhen Transsion Holdings  vs.  G bits Network Technology

Shenzhen Transsion

Risk-Adjusted Performance

Very Weak

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

G bits Network

Risk-Adjusted Performance

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.

Pair Trading with Shenzhen Transsion and G Bits

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

The idea behind Shenzhen Transsion Holdings and G bits Network 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.