Correlation Between Xiamen Insight and GigaDevice SemiconductorBei

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

By analyzing existing cross correlation between Xiamen Insight Investment and GigaDevice SemiconductorBeiji, you can compare the effects of market volatilities on Xiamen Insight and GigaDevice SemiconductorBei 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 Xiamen Insight with a short position of GigaDevice SemiconductorBei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xiamen Insight and GigaDevice SemiconductorBei.

Diversification Opportunities for Xiamen Insight and GigaDevice SemiconductorBei

0.35

Correlation Coefficient

Xiamen Insight  GigaDevice SemiconductorBei

Weak diversification

The 3 months correlation between Xiamen and GigaDevice is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Xiamen Insight Investment and GigaDevice SemiconductorBeiji in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaDevice SemiconductorBei and Xiamen Insight 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 Xiamen Insight Investment are associated (or correlated) with GigaDevice SemiconductorBei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GigaDevice SemiconductorBei has no effect on the direction of Xiamen Insight i.e., Xiamen Insight and GigaDevice SemiconductorBei go up and down completely randomly.

Pair Corralation between Xiamen Insight and GigaDevice SemiconductorBei

Assuming the 90 days trading horizon Xiamen Insight Investment is expected to generate 0.75 times more return on investment than GigaDevice SemiconductorBei. However, Xiamen Insight Investment is 1.33 times less risky than GigaDevice SemiconductorBei. It trades about 0.09 of its potential returns per unit of risk. GigaDevice SemiconductorBeiji is currently generating about 0.03 per unit of risk. If you would invest  4,349  in Xiamen Insight Investment on December 26, 2024 and sell it today you would earn a total of  575.00  from holding Xiamen Insight Investment or generate 13.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.28%
Values	Daily Returns

Xiamen Insight Investment  vs.  GigaDevice SemiconductorBeiji

Xiamen Insight Investment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xiamen Insight Investment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xiamen Insight sustained solid returns over the last few months and may actually be approaching a breakup point.

GigaDevice SemiconductorBei

Risk-Adjusted Performance

Weak

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

Pair Trading with Xiamen Insight and GigaDevice SemiconductorBei

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

The idea behind Xiamen Insight Investment and GigaDevice SemiconductorBeiji 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..