Correlation Between Piotech and G Bits

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

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

Diversification Opportunities for Piotech and G Bits

0.07

Correlation Coefficient

Piotech  G Bits

Significant diversification

The 3 months correlation between Piotech and 603444 is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Piotech Inc A and G bits Network Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G bits Network and Piotech 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 Piotech Inc A are associated (or correlated) with G Bits. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G bits Network has no effect on the direction of Piotech i.e., Piotech and G Bits go up and down completely randomly.

Pair Corralation between Piotech and G Bits

Assuming the 90 days trading horizon Piotech Inc A is expected to under-perform the G Bits. But the stock apears to be less risky and, when comparing its historical volatility, Piotech Inc A is 1.24 times less risky than G Bits. The stock trades about -0.29 of its potential returns per unit of risk. The G bits Network Technology is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  19,651  in G bits Network Technology on September 23, 2024 and sell it today you would earn a total of  3,119  from holding G bits Network Technology or generate 15.87% return on investment over 90 days.

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

Piotech Inc A  vs.  G bits Network Technology

Piotech Inc A

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Piotech Inc A are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Piotech sustained solid returns over the last few months and may actually be approaching a breakup point.

G bits Network

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in G bits Network Technology are ranked lower than 6 (%) 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.

Pair Trading with Piotech and G Bits

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

The idea behind Piotech Inc A and G bits Network Technology 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.