Correlation Between Hwabao WP and GigaDevice SemiconductorBei

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

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

Diversification Opportunities for Hwabao WP and GigaDevice SemiconductorBei

0.51

Correlation Coefficient

Hwabao WP  GigaDevice SemiconductorBei

Very weak diversification

The 3 months correlation between Hwabao and GigaDevice is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Hwabao WP CSI and GigaDevice SemiconductorBeiji in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaDevice SemiconductorBei and Hwabao WP 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 Hwabao WP CSI 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 Hwabao WP i.e., Hwabao WP and GigaDevice SemiconductorBei go up and down completely randomly.

Pair Corralation between Hwabao WP and GigaDevice SemiconductorBei

Assuming the 90 days trading horizon Hwabao WP is expected to generate 2.07 times less return on investment than GigaDevice SemiconductorBei. But when comparing it to its historical volatility, Hwabao WP CSI is 1.61 times less risky than GigaDevice SemiconductorBei. It trades about 0.04 of its potential returns per unit of risk. GigaDevice SemiconductorBeiji is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  7,786  in GigaDevice SemiconductorBeiji on October 7, 2024 and sell it today you would earn a total of  2,524  from holding GigaDevice SemiconductorBeiji or generate 32.42% return on investment over 90 days.

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

Hwabao WP CSI  vs.  GigaDevice SemiconductorBeiji

Hwabao WP CSI

Risk-Adjusted Performance

0 of 100

Very Weak

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

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GigaDevice SemiconductorBeiji are ranked lower than 3 (%) 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 February 2025.

Pair Trading with Hwabao WP and GigaDevice SemiconductorBei

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