Correlation Between Electronic Arts and Bilibili

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

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

Diversification Opportunities for Electronic Arts and Bilibili

0.38

Correlation Coefficient

Electronic Arts  Bilibili

Weak diversification

The 3 months correlation between Electronic and Bilibili is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Bilibili in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bilibili and Electronic Arts 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 Electronic Arts are associated (or correlated) with Bilibili. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bilibili has no effect on the direction of Electronic Arts i.e., Electronic Arts and Bilibili go up and down completely randomly.

Pair Corralation between Electronic Arts and Bilibili

Assuming the 90 days trading horizon Electronic Arts is expected to under-perform the Bilibili. But the stock apears to be less risky and, when comparing its historical volatility, Electronic Arts is 1.5 times less risky than Bilibili. The stock trades about -0.13 of its potential returns per unit of risk. The Bilibili is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,413  in Bilibili on December 2, 2024 and sell it today you would lose (35.00) from holding Bilibili or give up 1.45% of portfolio value over 90 days.

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

Electronic Arts  vs.  Bilibili

Electronic Arts

Risk-Adjusted Performance

Very Weak

Over the last 90 days Electronic Arts 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 forward indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Bilibili

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bilibili are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Bilibili is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Electronic Arts and Bilibili

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

The idea behind Electronic Arts and Bilibili 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.