Correlation Between GigaDevice SemiconductorBei and Xinyaqiang Silicon

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

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

Diversification Opportunities for GigaDevice SemiconductorBei and Xinyaqiang Silicon

-0.07

Correlation Coefficient

GigaDevice SemiconductorBei  Xinyaqiang Silicon

Good diversification

The 3 months correlation between GigaDevice and Xinyaqiang is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding GigaDevice SemiconductorBeiji and Xinyaqiang Silicon Chemistry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinyaqiang Silicon 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 Xinyaqiang Silicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinyaqiang Silicon has no effect on the direction of GigaDevice SemiconductorBei i.e., GigaDevice SemiconductorBei and Xinyaqiang Silicon go up and down completely randomly.

Pair Corralation between GigaDevice SemiconductorBei and Xinyaqiang Silicon

Assuming the 90 days trading horizon GigaDevice SemiconductorBeiji is expected to generate 1.07 times more return on investment than Xinyaqiang Silicon. However, GigaDevice SemiconductorBei is 1.07 times more volatile than Xinyaqiang Silicon Chemistry. It trades about 0.02 of its potential returns per unit of risk. Xinyaqiang Silicon Chemistry is currently generating about -0.01 per unit of risk. If you would invest  11,377  in GigaDevice SemiconductorBeiji on October 26, 2024 and sell it today you would earn a total of  1,673  from holding GigaDevice SemiconductorBeiji or generate 14.71% return on investment over 90 days.

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

GigaDevice SemiconductorBeiji  vs.  Xinyaqiang Silicon Chemistry

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.

Xinyaqiang Silicon

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Xinyaqiang Silicon Chemistry are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xinyaqiang Silicon may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with GigaDevice SemiconductorBei and Xinyaqiang Silicon

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

The idea behind GigaDevice SemiconductorBeiji and Xinyaqiang Silicon Chemistry 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.

Check out your portfolio center.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.