Correlation Between GigaDevice SemiconductorBei and FSPG Hi

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

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

Diversification Opportunities for GigaDevice SemiconductorBei and FSPG Hi

0.17

Correlation Coefficient

GigaDevice SemiconductorBei  FSPG Hi

Average diversification

The 3 months correlation between GigaDevice and FSPG is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding GigaDevice SemiconductorBeiji and FSPG Hi Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FSPG Hi Tech 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 FSPG Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FSPG Hi Tech has no effect on the direction of GigaDevice SemiconductorBei i.e., GigaDevice SemiconductorBei and FSPG Hi go up and down completely randomly.

Pair Corralation between GigaDevice SemiconductorBei and FSPG Hi

Assuming the 90 days trading horizon GigaDevice SemiconductorBeiji is expected to under-perform the FSPG Hi. But the stock apears to be less risky and, when comparing its historical volatility, GigaDevice SemiconductorBeiji is 1.39 times less risky than FSPG Hi. The stock trades about -0.32 of its potential returns per unit of risk. The FSPG Hi Tech Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  665.00  in FSPG Hi Tech Co on December 26, 2024 and sell it today you would earn a total of  6.00  from holding FSPG Hi Tech Co or generate 0.9% return on investment over 90 days.

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

GigaDevice SemiconductorBeiji  vs.  FSPG Hi Tech Co

GigaDevice SemiconductorBei

Risk-Adjusted Performance

Insignificant

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.

FSPG Hi Tech

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FSPG Hi Tech Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, FSPG Hi sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GigaDevice SemiconductorBei and FSPG Hi

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

The idea behind GigaDevice SemiconductorBeiji and FSPG Hi Tech 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.