Correlation Between GRUPUL INDUSTRIAL and Bittnet Systems

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

By analyzing existing cross correlation between GRUPUL INDUSTRIAL ELECTROCONTACT and Bittnet Systems SA, you can compare the effects of market volatilities on GRUPUL INDUSTRIAL and Bittnet Systems 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 GRUPUL INDUSTRIAL with a short position of Bittnet Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of GRUPUL INDUSTRIAL and Bittnet Systems.

Diversification Opportunities for GRUPUL INDUSTRIAL and Bittnet Systems

-0.72

Correlation Coefficient

GRUPUL INDUSTRIAL  Bittnet Systems

Pay attention - limited upside

The 3 months correlation between GRUPUL and Bittnet is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding GRUPUL INDUSTRIAL ELECTROCONTA and Bittnet Systems SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bittnet Systems SA and GRUPUL INDUSTRIAL 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 GRUPUL INDUSTRIAL ELECTROCONTACT are associated (or correlated) with Bittnet Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bittnet Systems SA has no effect on the direction of GRUPUL INDUSTRIAL i.e., GRUPUL INDUSTRIAL and Bittnet Systems go up and down completely randomly.

Pair Corralation between GRUPUL INDUSTRIAL and Bittnet Systems

Assuming the 90 days trading horizon GRUPUL INDUSTRIAL ELECTROCONTACT is expected to generate 1.9 times more return on investment than Bittnet Systems. However, GRUPUL INDUSTRIAL is 1.9 times more volatile than Bittnet Systems SA. It trades about 0.05 of its potential returns per unit of risk. Bittnet Systems SA is currently generating about -0.05 per unit of risk. If you would invest  3.00  in GRUPUL INDUSTRIAL ELECTROCONTACT on October 8, 2024 and sell it today you would earn a total of  1.45  from holding GRUPUL INDUSTRIAL ELECTROCONTACT or generate 48.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	56.97%
Values	Daily Returns

GRUPUL INDUSTRIAL ELECTROCONTA  vs.  Bittnet Systems SA

GRUPUL INDUSTRIAL

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days GRUPUL INDUSTRIAL ELECTROCONTACT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unfluctuating basic indicators, GRUPUL INDUSTRIAL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Bittnet Systems SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bittnet Systems SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with GRUPUL INDUSTRIAL and Bittnet Systems

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

The idea behind GRUPUL INDUSTRIAL ELECTROCONTACT and Bittnet Systems SA 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.