Correlation Between Changzhou Almaden and GigaDevice SemiconductorBei

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

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

Diversification Opportunities for Changzhou Almaden and GigaDevice SemiconductorBei

-0.2

Correlation Coefficient

Changzhou Almaden  GigaDevice SemiconductorBei

Good diversification

The 3 months correlation between Changzhou and GigaDevice is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Changzhou Almaden Co and GigaDevice SemiconductorBeiji in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaDevice SemiconductorBei and Changzhou Almaden 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 Changzhou Almaden Co 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 Changzhou Almaden i.e., Changzhou Almaden and GigaDevice SemiconductorBei go up and down completely randomly.

Pair Corralation between Changzhou Almaden and GigaDevice SemiconductorBei

Assuming the 90 days trading horizon Changzhou Almaden Co is expected to under-perform the GigaDevice SemiconductorBei. But the stock apears to be less risky and, when comparing its historical volatility, Changzhou Almaden Co is 2.15 times less risky than GigaDevice SemiconductorBei. The stock trades about -0.04 of its potential returns per unit of risk. The GigaDevice SemiconductorBeiji is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  11,382  in GigaDevice SemiconductorBeiji on December 29, 2024 and sell it today you would earn a total of  319.00  from holding GigaDevice SemiconductorBeiji or generate 2.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Changzhou Almaden Co  vs.  GigaDevice SemiconductorBeiji

Changzhou Almaden

Risk-Adjusted Performance

Very Weak

Over the last 90 days Changzhou Almaden Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Changzhou Almaden 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

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 weak basic indicators, GigaDevice SemiconductorBei may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Changzhou Almaden and GigaDevice SemiconductorBei

The main advantage of trading using opposite Changzhou Almaden and GigaDevice SemiconductorBei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Changzhou Almaden 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 Changzhou Almaden Co 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.