Correlation Between Bilibili and Digital Bros

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

By analyzing existing cross correlation between Bilibili and Digital Bros SpA, you can compare the effects of market volatilities on Bilibili and Digital Bros 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 Bilibili with a short position of Digital Bros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bilibili and Digital Bros.

Diversification Opportunities for Bilibili and Digital Bros

0.18

Correlation Coefficient

Bilibili  Digital Bros

Average diversification

The 3 months correlation between Bilibili and Digital is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Bilibili and Digital Bros SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Bros SpA and Bilibili 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 Bilibili are associated (or correlated) with Digital Bros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Bros SpA has no effect on the direction of Bilibili i.e., Bilibili and Digital Bros go up and down completely randomly.

Pair Corralation between Bilibili and Digital Bros

Assuming the 90 days trading horizon Bilibili is expected to generate 0.96 times more return on investment than Digital Bros. However, Bilibili is 1.04 times less risky than Digital Bros. It trades about 0.01 of its potential returns per unit of risk. Digital Bros SpA is currently generating about -0.01 per unit of risk. If you would invest  1,840  in Bilibili on December 23, 2024 and sell it today you would lose (30.00) from holding Bilibili or give up 1.63% of portfolio value over 90 days.

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

Bilibili  vs.  Digital Bros SpA

Bilibili

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bilibili has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Bilibili is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Digital Bros SpA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Digital Bros SpA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Digital Bros is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bilibili and Digital Bros

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

The idea behind Bilibili and Digital Bros SpA 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.