Correlation Between Bilibili and Nippon Steel
Can any of the company-specific risk be diversified away by investing in both Bilibili and Nippon Steel 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 Nippon Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bilibili and Nippon Steel, you can compare the effects of market volatilities on Bilibili and Nippon Steel 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 Nippon Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bilibili and Nippon Steel.
Diversification Opportunities for Bilibili and Nippon Steel
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bilibili and Nippon is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Bilibili and Nippon Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Steel 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 Nippon Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Steel has no effect on the direction of Bilibili i.e., Bilibili and Nippon Steel go up and down completely randomly.
Pair Corralation between Bilibili and Nippon Steel
Assuming the 90 days trading horizon Bilibili is expected to generate 2.4 times more return on investment than Nippon Steel. However, Bilibili is 2.4 times more volatile than Nippon Steel. It trades about 0.02 of its potential returns per unit of risk. Nippon Steel is currently generating about 0.03 per unit of risk. If you would invest 1,850 in Bilibili on August 26, 2024 and sell it today you would lose (60.00) from holding Bilibili or give up 3.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bilibili vs. Nippon Steel
Performance |
| Timeline |
| Bilibili |
| Nippon Steel |
Bilibili and Nippon Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bilibili and Nippon Steel
The main advantage of trading using opposite Bilibili and Nippon Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bilibili position performs unexpectedly, Nippon Steel 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 Nippon Steel will offset losses from the drop in Nippon Steel's long position.| Bilibili vs. Nippon Steel | Bilibili vs. Harmony Gold Mining | Bilibili vs. MCEWEN MINING INC | Bilibili vs. Boiron SA |
| Nippon Steel vs. MI Homes | Nippon Steel vs. Tri Pointe Homes | Nippon Steel vs. Aedas Homes SA | Nippon Steel vs. LG Display Co |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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