Correlation Between GigaDevice SemiconductorBei and Semiconductor Manufacturing

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

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

Diversification Opportunities for GigaDevice SemiconductorBei and Semiconductor Manufacturing

0.75

Correlation Coefficient

GigaDevice SemiconductorBei  Semiconductor Manufacturing

Poor diversification

The 3 months correlation between GigaDevice and Semiconductor is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding GigaDevice SemiconductorBeiji and Semiconductor Manufacturing El in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semiconductor Manufacturing 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 Semiconductor Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semiconductor Manufacturing has no effect on the direction of GigaDevice SemiconductorBei i.e., GigaDevice SemiconductorBei and Semiconductor Manufacturing go up and down completely randomly.

Pair Corralation between GigaDevice SemiconductorBei and Semiconductor Manufacturing

Assuming the 90 days trading horizon GigaDevice SemiconductorBei is expected to generate 1.49 times less return on investment than Semiconductor Manufacturing. But when comparing it to its historical volatility, GigaDevice SemiconductorBeiji is 1.18 times less risky than Semiconductor Manufacturing. It trades about 0.19 of its potential returns per unit of risk. Semiconductor Manufacturing Electronics is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  335.00  in Semiconductor Manufacturing Electronics on September 16, 2024 and sell it today you would earn a total of  241.00  from holding Semiconductor Manufacturing Electronics or generate 71.94% 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.  Semiconductor Manufacturing El

GigaDevice SemiconductorBei

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GigaDevice SemiconductorBeiji are ranked lower than 14 (%) 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.

Semiconductor Manufacturing

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Semiconductor Manufacturing Electronics are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Semiconductor Manufacturing sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GigaDevice SemiconductorBei and Semiconductor Manufacturing

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

The idea behind GigaDevice SemiconductorBeiji and Semiconductor Manufacturing Electronics 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.