Correlation Between Gravity and Bilibili

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

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

Diversification Opportunities for Gravity and Bilibili

-0.31

Correlation Coefficient

Gravity  Bilibili

Very good diversification

The 3 months correlation between Gravity and Bilibili is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Gravity Co and Bilibili in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bilibili and Gravity 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 Gravity Co are associated (or correlated) with Bilibili. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bilibili has no effect on the direction of Gravity i.e., Gravity and Bilibili go up and down completely randomly.

Pair Corralation between Gravity and Bilibili

Given the investment horizon of 90 days Gravity Co is expected to generate 0.36 times more return on investment than Bilibili. However, Gravity Co is 2.8 times less risky than Bilibili. It trades about -0.01 of its potential returns per unit of risk. Bilibili is currently generating about -0.01 per unit of risk. If you would invest  6,261  in Gravity Co on September 25, 2024 and sell it today you would lose (104.00) from holding Gravity Co or give up 1.66% of portfolio value over 90 days.

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

Gravity Co  vs.  Bilibili

Gravity

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gravity Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Gravity is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Bilibili

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bilibili are ranked lower than 3 (%) 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.

Pair Trading with Gravity and Bilibili

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

The idea behind Gravity Co and Bilibili 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.

Check out your portfolio center.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.