Correlation Between Beijing Baolande and G Bits

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

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

Diversification Opportunities for Beijing Baolande and G Bits

-0.4

Correlation Coefficient

Beijing Baolande  G Bits

Very good diversification

The 3 months correlation between Beijing and 603444 is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Baolande Software 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 Beijing Baolande 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 Beijing Baolande Software 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 Beijing Baolande i.e., Beijing Baolande and G Bits go up and down completely randomly.

Pair Corralation between Beijing Baolande and G Bits

Assuming the 90 days trading horizon Beijing Baolande Software is expected to generate 1.38 times more return on investment than G Bits. However, Beijing Baolande is 1.38 times more volatile than G bits Network Technology. It trades about -0.01 of its potential returns per unit of risk. G bits Network Technology is currently generating about -0.02 per unit of risk. If you would invest  4,488  in Beijing Baolande Software on October 10, 2024 and sell it today you would lose (1,887) from holding Beijing Baolande Software or give up 42.05% of portfolio value over 90 days.

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

Beijing Baolande Software  vs.  G bits Network Technology

Beijing Baolande Software

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Beijing Baolande Software are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Beijing Baolande may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Beijing Baolande and G Bits

The main advantage of trading using opposite Beijing Baolande and G Bits positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing Baolande 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 Beijing Baolande Software 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.