Correlation Between GigaDevice SemiconductorBei and Yunnan Aluminium

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

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

Diversification Opportunities for GigaDevice SemiconductorBei and Yunnan Aluminium

0.29

Correlation Coefficient

GigaDevice SemiconductorBei  Yunnan Aluminium

Modest diversification

The 3 months correlation between GigaDevice and Yunnan is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding GigaDevice SemiconductorBeiji and Yunnan Aluminium Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yunnan Aluminium 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 Yunnan Aluminium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yunnan Aluminium has no effect on the direction of GigaDevice SemiconductorBei i.e., GigaDevice SemiconductorBei and Yunnan Aluminium go up and down completely randomly.

Pair Corralation between GigaDevice SemiconductorBei and Yunnan Aluminium

Assuming the 90 days trading horizon GigaDevice SemiconductorBei is expected to generate 1.22 times less return on investment than Yunnan Aluminium. In addition to that, GigaDevice SemiconductorBei is 1.26 times more volatile than Yunnan Aluminium Co. It trades about 0.01 of its total potential returns per unit of risk. Yunnan Aluminium Co is currently generating about 0.02 per unit of volatility. If you would invest  1,213  in Yunnan Aluminium Co on October 4, 2024 and sell it today you would earn a total of  140.00  from holding Yunnan Aluminium Co or generate 11.54% return on investment over 90 days.

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

GigaDevice SemiconductorBeiji  vs.  Yunnan Aluminium Co

GigaDevice SemiconductorBei

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GigaDevice SemiconductorBeiji are ranked lower than 4 (%) 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.

Yunnan Aluminium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yunnan Aluminium Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with GigaDevice SemiconductorBei and Yunnan Aluminium

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

The idea behind GigaDevice SemiconductorBeiji and Yunnan Aluminium Co 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.