Correlation Between GigaDevice SemiconductorBei and Jiangsu Pacific

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

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

Diversification Opportunities for GigaDevice SemiconductorBei and Jiangsu Pacific

-0.77

Correlation Coefficient

GigaDevice SemiconductorBei  Jiangsu Pacific

Pay attention - limited upside

The 3 months correlation between GigaDevice and Jiangsu is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding GigaDevice SemiconductorBeiji and Jiangsu Pacific Quartz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Pacific Quartz 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 Jiangsu Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Pacific Quartz has no effect on the direction of GigaDevice SemiconductorBei i.e., GigaDevice SemiconductorBei and Jiangsu Pacific go up and down completely randomly.

Pair Corralation between GigaDevice SemiconductorBei and Jiangsu Pacific

Assuming the 90 days trading horizon GigaDevice SemiconductorBeiji is expected to generate 2.18 times more return on investment than Jiangsu Pacific. However, GigaDevice SemiconductorBei is 2.18 times more volatile than Jiangsu Pacific Quartz. It trades about 0.19 of its potential returns per unit of risk. Jiangsu Pacific Quartz is currently generating about -0.13 per unit of risk. If you would invest  8,587  in GigaDevice SemiconductorBeiji on December 4, 2024 and sell it today you would earn a total of  4,371  from holding GigaDevice SemiconductorBeiji or generate 50.9% return on investment over 90 days.

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

GigaDevice SemiconductorBeiji  vs.  Jiangsu Pacific Quartz

GigaDevice SemiconductorBei

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GigaDevice SemiconductorBeiji are ranked lower than 15 (%) 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.

Jiangsu Pacific Quartz

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jiangsu Pacific Quartz has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with GigaDevice SemiconductorBei and Jiangsu Pacific

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

The idea behind GigaDevice SemiconductorBeiji and Jiangsu Pacific Quartz 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.