Correlation Between G Bits and Contec Medical

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

By analyzing existing cross correlation between G bits Network Technology and Contec Medical Systems, you can compare the effects of market volatilities on G Bits and Contec Medical 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 G Bits with a short position of Contec Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of G Bits and Contec Medical.

Diversification Opportunities for G Bits and Contec Medical

0.75

Correlation Coefficient

G Bits  Contec Medical

Poor diversification

The 3 months correlation between 603444 and Contec is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding G bits Network Technology and Contec Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contec Medical Systems and G Bits 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 G bits Network Technology are associated (or correlated) with Contec Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contec Medical Systems has no effect on the direction of G Bits i.e., G Bits and Contec Medical go up and down completely randomly.

Pair Corralation between G Bits and Contec Medical

Assuming the 90 days trading horizon G Bits is expected to generate 7.93 times less return on investment than Contec Medical. But when comparing it to its historical volatility, G bits Network Technology is 1.09 times less risky than Contec Medical. It trades about 0.01 of its potential returns per unit of risk. Contec Medical Systems is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,312  in Contec Medical Systems on September 5, 2024 and sell it today you would earn a total of  287.00  from holding Contec Medical Systems or generate 21.88% return on investment over 90 days.

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

G bits Network Technology  vs.  Contec Medical Systems

G bits Network

Risk-Adjusted Performance

1 of 100

Weak

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

Contec Medical Systems

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Contec Medical Systems are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Contec Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with G Bits and Contec Medical

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

The idea behind G bits Network Technology and Contec Medical Systems 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.