Correlation Between Bilibili and Giga Media

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

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

Diversification Opportunities for Bilibili and Giga Media

-0.74

Correlation Coefficient

Bilibili  Giga Media

Pay attention - limited upside

The 3 months correlation between Bilibili and Giga is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bilibili and Giga Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Giga Media 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 Giga Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Giga Media has no effect on the direction of Bilibili i.e., Bilibili and Giga Media go up and down completely randomly.

Pair Corralation between Bilibili and Giga Media

Given the investment horizon of 90 days Bilibili is expected to under-perform the Giga Media. In addition to that, Bilibili is 1.85 times more volatile than Giga Media. It trades about -0.01 of its total potential returns per unit of risk. Giga Media is currently generating about -0.01 per unit of volatility. If you would invest  174.00  in Giga Media on January 19, 2024 and sell it today you would lose (43.00) from holding Giga Media or give up 24.71% of portfolio value over 90 days.

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

Bilibili  vs.  Giga Media

Bilibili

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bilibili are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal essential indicators, Bilibili demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Giga Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Giga Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Bilibili and Giga Media

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

The idea behind Bilibili and Giga Media 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.