Correlation Between China Nonferrous and GigaDevice SemiconductorBei

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

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

Diversification Opportunities for China Nonferrous and GigaDevice SemiconductorBei

0.57

Correlation Coefficient

China Nonferrous  GigaDevice SemiconductorBei

Very weak diversification

The 3 months correlation between China and GigaDevice is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding China Nonferrous Metal and GigaDevice SemiconductorBeiji in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaDevice SemiconductorBei and China Nonferrous 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 China Nonferrous Metal 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 China Nonferrous i.e., China Nonferrous and GigaDevice SemiconductorBei go up and down completely randomly.

Pair Corralation between China Nonferrous and GigaDevice SemiconductorBei

Assuming the 90 days trading horizon China Nonferrous is expected to generate 5.26 times less return on investment than GigaDevice SemiconductorBei. But when comparing it to its historical volatility, China Nonferrous Metal is 1.38 times less risky than GigaDevice SemiconductorBei. It trades about 0.01 of its potential returns per unit of risk. GigaDevice SemiconductorBeiji is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  9,680  in GigaDevice SemiconductorBeiji on September 28, 2024 and sell it today you would earn a total of  1,820  from holding GigaDevice SemiconductorBeiji or generate 18.8% return on investment over 90 days.

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

China Nonferrous Metal  vs.  GigaDevice SemiconductorBeiji

China Nonferrous Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Nonferrous Metal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, China Nonferrous is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

GigaDevice SemiconductorBei

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GigaDevice SemiconductorBeiji are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, GigaDevice SemiconductorBei sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Nonferrous and GigaDevice SemiconductorBei

The main advantage of trading using opposite China Nonferrous and GigaDevice SemiconductorBei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Nonferrous 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 China Nonferrous Metal 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 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.