Correlation Between GigaDevice SemiconductorBei and Zoy Home

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

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

Diversification Opportunities for GigaDevice SemiconductorBei and Zoy Home

0.69

Correlation Coefficient

GigaDevice SemiconductorBei  Zoy Home

Poor diversification

The 3 months correlation between GigaDevice and Zoy is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding GigaDevice SemiconductorBeiji and Zoy Home Furnishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zoy Home Furnishing 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 Zoy Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zoy Home Furnishing has no effect on the direction of GigaDevice SemiconductorBei i.e., GigaDevice SemiconductorBei and Zoy Home go up and down completely randomly.

Pair Corralation between GigaDevice SemiconductorBei and Zoy Home

Assuming the 90 days trading horizon GigaDevice SemiconductorBeiji is expected to generate 1.29 times more return on investment than Zoy Home. However, GigaDevice SemiconductorBei is 1.29 times more volatile than Zoy Home Furnishing. It trades about 0.25 of its potential returns per unit of risk. Zoy Home Furnishing is currently generating about 0.2 per unit of risk. If you would invest  6,513  in GigaDevice SemiconductorBeiji on September 21, 2024 and sell it today you would earn a total of  4,702  from holding GigaDevice SemiconductorBeiji or generate 72.19% return on investment over 90 days.

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

GigaDevice SemiconductorBeiji  vs.  Zoy Home Furnishing

GigaDevice SemiconductorBei

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GigaDevice SemiconductorBeiji are ranked lower than 19 (%) 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.

Zoy Home Furnishing

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zoy Home Furnishing are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zoy Home sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GigaDevice SemiconductorBei and Zoy Home

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

The idea behind GigaDevice SemiconductorBeiji and Zoy Home Furnishing 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.