Correlation Between Bilibili and China Foods

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

By analyzing existing cross correlation between Bilibili and China Foods Limited, you can compare the effects of market volatilities on Bilibili and China Foods 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 China Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bilibili and China Foods.

Diversification Opportunities for Bilibili and China Foods

0.0

Correlation Coefficient

Bilibili  China Foods

Pay attention - limited upside

The 3 months correlation between Bilibili and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bilibili and China Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Foods Limited 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 China Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Foods Limited has no effect on the direction of Bilibili i.e., Bilibili and China Foods go up and down completely randomly.

Pair Corralation between Bilibili and China Foods

If you would invest  1.17  in China Foods Limited on October 9, 2024 and sell it today you would earn a total of  0.00  from holding China Foods Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Bilibili  vs.  China Foods Limited

Bilibili

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bilibili 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 essential indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

China Foods Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bilibili and China Foods

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

The idea behind Bilibili and China Foods Limited 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.