Correlation Between GigaDevice SemiconductorBei and Ningxia Building

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

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

Diversification Opportunities for GigaDevice SemiconductorBei and Ningxia Building

0.0

Correlation Coefficient

GigaDevice SemiconductorBei  Ningxia Building

Pay attention - limited upside

The 3 months correlation between GigaDevice and Ningxia is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GigaDevice SemiconductorBeiji and Ningxia Building Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningxia Building Mat 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 Ningxia Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningxia Building Mat has no effect on the direction of GigaDevice SemiconductorBei i.e., GigaDevice SemiconductorBei and Ningxia Building go up and down completely randomly.

Pair Corralation between GigaDevice SemiconductorBei and Ningxia Building

Assuming the 90 days trading horizon GigaDevice SemiconductorBeiji is expected to generate 1.23 times more return on investment than Ningxia Building. However, GigaDevice SemiconductorBei is 1.23 times more volatile than Ningxia Building Materials. It trades about 0.04 of its potential returns per unit of risk. Ningxia Building Materials is currently generating about 0.02 per unit of risk. If you would invest  11,196  in GigaDevice SemiconductorBeiji on December 27, 2024 and sell it today you would earn a total of  500.00  from holding GigaDevice SemiconductorBeiji or generate 4.47% return on investment over 90 days.

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

GigaDevice SemiconductorBeiji  vs.  Ningxia Building Materials

GigaDevice SemiconductorBei

Risk-Adjusted Performance

Weak

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 April 2025.

Ningxia Building Mat

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ningxia Building Materials are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Ningxia Building 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 Ningxia Building

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

The idea behind GigaDevice SemiconductorBeiji and Ningxia Building Materials 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.