Correlation Between NetEaseInc and BTX Old

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Can any of the company-specific risk be diversified away by investing in both NetEaseInc and BTX Old 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 NetEaseInc and BTX Old into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NetEaseInc and BTX Old, you can compare the effects of market volatilities on NetEaseInc and BTX Old 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 NetEaseInc with a short position of BTX Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of NetEaseInc and BTX Old.

Diversification Opportunities for NetEaseInc and BTX Old

-0.73
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between NetEaseInc and BTX Old is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding NetEaseInc and BTX Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTX Old and NetEaseInc 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 NetEaseInc are associated (or correlated) with BTX Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTX Old has no effect on the direction of NetEaseInc i.e., NetEaseInc and BTX Old go up and down completely randomly.

Pair Corralation between NetEaseInc and BTX Old

Assuming the 90 days horizon NetEaseInc is expected to under-perform the BTX Old. But the otc pink sheet apears to be less risky and, when comparing its historical volatility, NetEaseInc is 10.0 times less risky than BTX Old. The otc pink sheet trades about 0.0 of its potential returns per unit of risk. The BTX Old is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,491  in BTX Old on September 8, 2022 and sell it today you would lose (1,161)  from holding BTX Old or give up 77.87% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy98.4%
ValuesDaily Returns

NetEaseInc  vs.  BTX Old

 Performance (%) 
       Timeline  
NetEaseInc 
NetEaseInc Performance
0 of 100
Over the last 90 days NetEaseInc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2023. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

NetEaseInc Price Channel

BTX Old 
BTX Old Performance
0 of 100
Over the last 90 days BTX Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, BTX Old showed solid returns over the last few months and may actually be approaching a breakup point.

NetEaseInc and BTX Old Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NetEaseInc and BTX Old

The main advantage of trading using opposite NetEaseInc and BTX Old positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NetEaseInc position performs unexpectedly, BTX Old 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 BTX Old will offset losses from the drop in BTX Old's long position.
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The idea behind NetEaseInc and BTX Old 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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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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