Correlation Between Bilibili and Gravity

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

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

Diversification Opportunities for Bilibili and Gravity

-0.36

Correlation Coefficient

Bilibili  Gravity

Very good diversification

The 3 months correlation between Bilibili and Gravity is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bilibili and Gravity Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gravity 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 Gravity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gravity has no effect on the direction of Bilibili i.e., Bilibili and Gravity go up and down completely randomly.

Pair Corralation between Bilibili and Gravity

Given the investment horizon of 90 days Bilibili is expected to generate 3.72 times more return on investment than Gravity. However, Bilibili is 3.72 times more volatile than Gravity Co. It trades about 0.26 of its potential returns per unit of risk. Gravity Co is currently generating about -0.13 per unit of risk. If you would invest  1,541  in Bilibili on July 14, 2024 and sell it today you would earn a total of  723.00  from holding Bilibili or generate 46.92% return on investment over 90 days.

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

Bilibili  vs.  Gravity Co

Bilibili

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bilibili are ranked lower than 10 (%) 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.

Gravity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gravity Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in November 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bilibili and Gravity

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

The idea behind Bilibili and Gravity Co 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.