Correlation Between Ningbo Fangzheng and GigaDevice SemiconductorBei

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

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

Diversification Opportunities for Ningbo Fangzheng and GigaDevice SemiconductorBei

-0.07

Correlation Coefficient

Ningbo Fangzheng  GigaDevice SemiconductorBei

Good diversification

The 3 months correlation between Ningbo and GigaDevice is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo Fangzheng Automobile and GigaDevice SemiconductorBeiji in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaDevice SemiconductorBei and Ningbo Fangzheng 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 Ningbo Fangzheng Automobile 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 Ningbo Fangzheng i.e., Ningbo Fangzheng and GigaDevice SemiconductorBei go up and down completely randomly.

Pair Corralation between Ningbo Fangzheng and GigaDevice SemiconductorBei

Assuming the 90 days trading horizon Ningbo Fangzheng Automobile is expected to under-perform the GigaDevice SemiconductorBei. In addition to that, Ningbo Fangzheng is 1.03 times more volatile than GigaDevice SemiconductorBeiji. It trades about -0.02 of its total potential returns per unit of risk. GigaDevice SemiconductorBeiji is currently generating about 0.01 per unit of volatility. If you would invest  12,196  in GigaDevice SemiconductorBeiji on October 11, 2024 and sell it today you would lose (731.00) from holding GigaDevice SemiconductorBeiji or give up 5.99% of portfolio value over 90 days.

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

Ningbo Fangzheng Automobile  vs.  GigaDevice SemiconductorBeiji

Ningbo Fangzheng Aut

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ningbo Fangzheng Automobile are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Ningbo Fangzheng 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

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GigaDevice SemiconductorBeiji are ranked lower than 12 (%) 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 Ningbo Fangzheng and GigaDevice SemiconductorBei

The main advantage of trading using opposite Ningbo Fangzheng and GigaDevice SemiconductorBei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ningbo Fangzheng 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 Ningbo Fangzheng Automobile 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.