Correlation Between ENERGYMACHINERY KOREA and BIT Computer

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

By analyzing existing cross correlation between ENERGYMACHINERY KOREA CoLtd and BIT Computer Co, you can compare the effects of market volatilities on ENERGYMACHINERY KOREA and BIT Computer 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 ENERGYMACHINERY KOREA with a short position of BIT Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENERGYMACHINERY KOREA and BIT Computer.

Diversification Opportunities for ENERGYMACHINERY KOREA and BIT Computer

0.43

Correlation Coefficient

ENERGYMACHINERY KOREA  BIT Computer

Very weak diversification

The 3 months correlation between ENERGYMACHINERY and BIT is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding ENERGYMACHINERY KOREA CoLtd and BIT Computer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIT Computer and ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA CoLtd are associated (or correlated) with BIT Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIT Computer has no effect on the direction of ENERGYMACHINERY KOREA i.e., ENERGYMACHINERY KOREA and BIT Computer go up and down completely randomly.

Pair Corralation between ENERGYMACHINERY KOREA and BIT Computer

Assuming the 90 days trading horizon ENERGYMACHINERY KOREA CoLtd is expected to under-perform the BIT Computer. In addition to that, ENERGYMACHINERY KOREA is 1.92 times more volatile than BIT Computer Co. It trades about -0.1 of its total potential returns per unit of risk. BIT Computer Co is currently generating about -0.09 per unit of volatility. If you would invest  547,000  in BIT Computer Co on September 3, 2024 and sell it today you would lose (46,000) from holding BIT Computer Co or give up 8.41% of portfolio value over 90 days.

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

ENERGYMACHINERY KOREA CoLtd  vs.  BIT Computer Co

ENERGYMACHINERY KOREA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ENERGYMACHINERY KOREA CoLtd 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 basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

BIT Computer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BIT Computer Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with ENERGYMACHINERY KOREA and BIT Computer

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

The idea behind ENERGYMACHINERY KOREA CoLtd and BIT Computer Co 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.