Correlation Between G Bits and Eastroc Beverage

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

Diversification Opportunities for G Bits and Eastroc Beverage

0.65

Correlation Coefficient

G Bits  Eastroc Beverage

Poor diversification

The 3 months correlation between 603444 and Eastroc is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding G bits Network Technology and Eastroc Beverage Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastroc Beverage 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 Eastroc Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastroc Beverage has no effect on the direction of G Bits i.e., G Bits and Eastroc Beverage go up and down completely randomly.

Pair Corralation between G Bits and Eastroc Beverage

Assuming the 90 days trading horizon G Bits is expected to generate 2.12 times less return on investment than Eastroc Beverage. In addition to that, G Bits is 1.57 times more volatile than Eastroc Beverage Group. It trades about 0.05 of its total potential returns per unit of risk. Eastroc Beverage Group is currently generating about 0.18 per unit of volatility. If you would invest  17,484  in Eastroc Beverage Group on September 4, 2024 and sell it today you would earn a total of  4,356  from holding Eastroc Beverage Group or generate 24.91% 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.  Eastroc Beverage Group

G bits Network

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in G bits Network Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, G Bits may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Eastroc Beverage

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eastroc Beverage Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Eastroc Beverage sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with G Bits and Eastroc Beverage

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

The idea behind G bits Network Technology and Eastroc Beverage Group 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.