Correlation Between Shanghai CEO and G Bits

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

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

Diversification Opportunities for Shanghai CEO and G Bits

0.33

Correlation Coefficient

Shanghai CEO  G Bits

Weak diversification

The 3 months correlation between Shanghai and 603444 is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai CEO Environmental 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 Shanghai CEO 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 Shanghai CEO Environmental 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 Shanghai CEO i.e., Shanghai CEO and G Bits go up and down completely randomly.

Pair Corralation between Shanghai CEO and G Bits

Assuming the 90 days trading horizon Shanghai CEO Environmental is expected to under-perform the G Bits. But the stock apears to be less risky and, when comparing its historical volatility, Shanghai CEO Environmental is 1.11 times less risky than G Bits. The stock trades about -0.08 of its potential returns per unit of risk. The G bits Network Technology is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  19,835  in G bits Network Technology on September 24, 2024 and sell it today you would earn a total of  2,935  from holding G bits Network Technology or generate 14.8% return on investment over 90 days.

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

Shanghai CEO Environmental  vs.  G bits Network Technology

Shanghai CEO Environ

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai CEO Environmental are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shanghai CEO sustained solid returns over the last few months and may actually be approaching a breakup point.

G bits Network

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in G bits Network Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, G Bits sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shanghai CEO and G Bits

The main advantage of trading using opposite Shanghai CEO and G Bits positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai CEO 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 Shanghai CEO Environmental 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 Anywhere module to track or share privately all of your investments from the convenience of any device.