Correlation Between G Bits and Zhejiang Publishing

Can any of the company-specific risk be diversified away by investing in both G Bits and Zhejiang Publishing 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 Zhejiang Publishing 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 Zhejiang Publishing Media, you can compare the effects of market volatilities on G Bits and Zhejiang Publishing 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 Zhejiang Publishing. Check out your portfolio center. Please also check ongoing floating volatility patterns of G Bits and Zhejiang Publishing.

Diversification Opportunities for G Bits and Zhejiang Publishing

0.86

Correlation Coefficient

G Bits  Zhejiang Publishing

Very poor diversification

The 3 months correlation between 603444 and Zhejiang is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding G bits Network Technology and Zhejiang Publishing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Publishing Media 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 Zhejiang Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Publishing Media has no effect on the direction of G Bits i.e., G Bits and Zhejiang Publishing go up and down completely randomly.

Pair Corralation between G Bits and Zhejiang Publishing

Assuming the 90 days trading horizon G bits Network Technology is expected to generate 1.26 times more return on investment than Zhejiang Publishing. However, G Bits is 1.26 times more volatile than Zhejiang Publishing Media. It trades about 0.12 of its potential returns per unit of risk. Zhejiang Publishing Media is currently generating about 0.08 per unit of risk. If you would invest  18,740  in G bits Network Technology on September 13, 2024 and sell it today you would earn a total of  4,060  from holding G bits Network Technology or generate 21.66% return on investment over 90 days.

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

G bits Network Technology  vs.  Zhejiang Publishing Media

G bits Network

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in G bits Network Technology are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, G Bits sustained solid returns over the last few months and may actually be approaching a breakup point.

Zhejiang Publishing Media

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zhejiang Publishing Media are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhejiang Publishing sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with G Bits and Zhejiang Publishing

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

The idea behind G bits Network Technology and Zhejiang Publishing Media 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.