Correlation Between GigaDevice SemiconductorBei and Hengkang Medical

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

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

Diversification Opportunities for GigaDevice SemiconductorBei and Hengkang Medical

-0.38

Correlation Coefficient

GigaDevice SemiconductorBei  Hengkang Medical

Very good diversification

The 3 months correlation between GigaDevice and Hengkang is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding GigaDevice SemiconductorBeiji and Hengkang Medical Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hengkang Medical 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 Hengkang Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hengkang Medical has no effect on the direction of GigaDevice SemiconductorBei i.e., GigaDevice SemiconductorBei and Hengkang Medical go up and down completely randomly.

Pair Corralation between GigaDevice SemiconductorBei and Hengkang Medical

Assuming the 90 days trading horizon GigaDevice SemiconductorBeiji is expected to generate 1.36 times more return on investment than Hengkang Medical. However, GigaDevice SemiconductorBei is 1.36 times more volatile than Hengkang Medical Group. It trades about 0.2 of its potential returns per unit of risk. Hengkang Medical Group is currently generating about -0.22 per unit of risk. If you would invest  10,976  in GigaDevice SemiconductorBeiji on October 26, 2024 and sell it today you would earn a total of  2,071  from holding GigaDevice SemiconductorBeiji or generate 18.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

GigaDevice SemiconductorBeiji  vs.  Hengkang Medical Group

GigaDevice SemiconductorBei

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GigaDevice SemiconductorBeiji are ranked lower than 13 (%) 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.

Hengkang Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hengkang Medical Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hengkang Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GigaDevice SemiconductorBei and Hengkang Medical

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

The idea behind GigaDevice SemiconductorBeiji and Hengkang Medical Group 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.