Correlation Between NetEase and Bilibili
Can any of the company-specific risk be diversified away by investing in both NetEase 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 NetEase and Bilibili into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NetEase and Bilibili, you can compare the effects of market volatilities on NetEase 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 NetEase with a short position of Bilibili. Check out your portfolio center. Please also check ongoing floating volatility patterns of NetEase and Bilibili.
Diversification Opportunities for NetEase and Bilibili
Very weak diversification
The 3 months correlation between NetEase and Bilibili is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding NetEase and Bilibili in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bilibili and NetEase 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 NetEase 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 NetEase i.e., NetEase and Bilibili go up and down completely randomly.
Pair Corralation between NetEase and Bilibili
Given the investment horizon of 90 days NetEase is expected to generate 2.59 times less return on investment than Bilibili. But when comparing it to its historical volatility, NetEase is 3.96 times less risky than Bilibili. It trades about 0.13 of its potential returns per unit of risk. Bilibili is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,500 in Bilibili on September 12, 2024 and sell it today you would earn a total of 655.00 from holding Bilibili or generate 43.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NetEase vs. Bilibili
Performance |
| Timeline |
| NetEase |
| Bilibili |
NetEase and Bilibili Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NetEase and Bilibili
The main advantage of trading using opposite NetEase and Bilibili positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NetEase 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.| NetEase vs. Roblox Corp | NetEase vs. Skillz Platform | NetEase vs. Take Two Interactive Software | NetEase vs. Nintendo Co ADR |
| Bilibili vs. NetEase | Bilibili vs. Roblox Corp | Bilibili vs. Skillz Platform | Bilibili vs. Take Two Interactive Software |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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