Correlation Between GigaDevice SemiconductorBei and Xinya Electronic

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

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

Diversification Opportunities for GigaDevice SemiconductorBei and Xinya Electronic

0.83

Correlation Coefficient

GigaDevice SemiconductorBei  Xinya Electronic

Very poor diversification

The 3 months correlation between GigaDevice and Xinya is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding GigaDevice SemiconductorBeiji and Xinya Electronic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinya Electronic 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 Xinya Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinya Electronic has no effect on the direction of GigaDevice SemiconductorBei i.e., GigaDevice SemiconductorBei and Xinya Electronic go up and down completely randomly.

Pair Corralation between GigaDevice SemiconductorBei and Xinya Electronic

Assuming the 90 days trading horizon GigaDevice SemiconductorBeiji is expected to generate 1.75 times more return on investment than Xinya Electronic. However, GigaDevice SemiconductorBei is 1.75 times more volatile than Xinya Electronic Co. It trades about 0.38 of its potential returns per unit of risk. Xinya Electronic Co is currently generating about 0.34 per unit of risk. If you would invest  8,438  in GigaDevice SemiconductorBeiji on September 23, 2024 and sell it today you would earn a total of  2,882  from holding GigaDevice SemiconductorBeiji or generate 34.16% return on investment over 90 days.

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

GigaDevice SemiconductorBeiji  vs.  Xinya Electronic Co

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.

Xinya Electronic

Risk-Adjusted Performance

15 of 100

Good

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

Pair Trading with GigaDevice SemiconductorBei and Xinya Electronic

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

The idea behind GigaDevice SemiconductorBeiji and Xinya Electronic Co 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.