Correlation Between GigaDevice SemiconductorBei and China Reform

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

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

Diversification Opportunities for GigaDevice SemiconductorBei and China Reform

-0.75

Correlation Coefficient

GigaDevice SemiconductorBei  China Reform

Pay attention - limited upside

The 3 months correlation between GigaDevice and China is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding GigaDevice SemiconductorBeiji and China Reform Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Reform Health and GigaDevice SemiconductorBei 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 GigaDevice SemiconductorBeiji are associated (or correlated) with China Reform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Reform Health has no effect on the direction of GigaDevice SemiconductorBei i.e., GigaDevice SemiconductorBei and China Reform go up and down completely randomly.

Pair Corralation between GigaDevice SemiconductorBei and China Reform

Assuming the 90 days trading horizon GigaDevice SemiconductorBeiji is expected to generate 1.02 times more return on investment than China Reform. However, GigaDevice SemiconductorBei is 1.02 times more volatile than China Reform Health. It trades about 0.19 of its potential returns per unit of risk. China Reform Health is currently generating about -0.18 per unit of risk. If you would invest  8,830  in GigaDevice SemiconductorBeiji on October 24, 2024 and sell it today you would earn a total of  4,380  from holding GigaDevice SemiconductorBeiji or generate 49.6% return on investment over 90 days.

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

GigaDevice SemiconductorBeiji  vs.  China Reform Health

GigaDevice SemiconductorBei

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GigaDevice SemiconductorBeiji are ranked lower than 14 (%) 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.

China Reform Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Reform Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with GigaDevice SemiconductorBei and China Reform

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

The idea behind GigaDevice SemiconductorBeiji and China Reform Health 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.