Correlation Between Bilibili and Gaxosai

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

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

Diversification Opportunities for Bilibili and Gaxosai

0.2

Correlation Coefficient

Bilibili  Gaxosai

Modest diversification

The 3 months correlation between Bilibili and Gaxosai is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bilibili and Gaxosai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaxosai 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 Gaxosai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaxosai has no effect on the direction of Bilibili i.e., Bilibili and Gaxosai go up and down completely randomly.

Pair Corralation between Bilibili and Gaxosai

Given the investment horizon of 90 days Bilibili is expected to generate 4.15 times less return on investment than Gaxosai. But when comparing it to its historical volatility, Bilibili is 3.64 times less risky than Gaxosai. It trades about 0.06 of its potential returns per unit of risk. Gaxosai is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  128.00  in Gaxosai on November 28, 2024 and sell it today you would lose (5.00) from holding Gaxosai or give up 3.91% of portfolio value over 90 days.

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

Bilibili  vs.  Gaxosai

Bilibili

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bilibili are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak essential indicators, Bilibili demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Gaxosai

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gaxosai are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Gaxosai demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bilibili and Gaxosai

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

The idea behind Bilibili and Gaxosai 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.