Correlation Between Bilibili and Nintendo

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

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

Diversification Opportunities for Bilibili and Nintendo

-0.05

Correlation Coefficient

Bilibili  Nintendo

Good diversification

The 3 months correlation between Bilibili and Nintendo is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Bilibili and Nintendo Co ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nintendo Co ADR and Bilibili 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 Bilibili are associated (or correlated) with Nintendo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nintendo Co ADR has no effect on the direction of Bilibili i.e., Bilibili and Nintendo go up and down completely randomly.

Pair Corralation between Bilibili and Nintendo

Given the investment horizon of 90 days Bilibili is expected to generate 3.98 times more return on investment than Nintendo. However, Bilibili is 3.98 times more volatile than Nintendo Co ADR. It trades about 0.1 of its potential returns per unit of risk. Nintendo Co ADR is currently generating about 0.13 per unit of risk. If you would invest  1,541  in Bilibili on September 12, 2024 and sell it today you would earn a total of  520.00  from holding Bilibili or generate 33.74% return on investment over 90 days.

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

Bilibili  vs.  Nintendo Co ADR

Bilibili

Risk-Adjusted Performance

8 of 100

OK

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

Nintendo Co ADR

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nintendo Co ADR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Nintendo showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bilibili and Nintendo

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

The idea behind Bilibili and Nintendo Co ADR 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 CEOs Directory module to screen CEOs from public companies around the world.