Correlation Between GigaDevice SemiconductorBei and ROPEOK Technology

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

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

Diversification Opportunities for GigaDevice SemiconductorBei and ROPEOK Technology

-0.46

Correlation Coefficient

GigaDevice SemiconductorBei  ROPEOK Technology

Very good diversification

The 3 months correlation between GigaDevice and ROPEOK is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding GigaDevice SemiconductorBeiji and ROPEOK Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROPEOK Technology 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 ROPEOK Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROPEOK Technology has no effect on the direction of GigaDevice SemiconductorBei i.e., GigaDevice SemiconductorBei and ROPEOK Technology go up and down completely randomly.

Pair Corralation between GigaDevice SemiconductorBei and ROPEOK Technology

Assuming the 90 days trading horizon GigaDevice SemiconductorBeiji is expected to generate 1.56 times more return on investment than ROPEOK Technology. However, GigaDevice SemiconductorBei is 1.56 times more volatile than ROPEOK Technology Group. It trades about 0.15 of its potential returns per unit of risk. ROPEOK Technology Group is currently generating about -0.01 per unit of risk. If you would invest  11,500  in GigaDevice SemiconductorBeiji on October 27, 2024 and sell it today you would earn a total of  1,550  from holding GigaDevice SemiconductorBeiji or generate 13.48% return on investment over 90 days.

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

GigaDevice SemiconductorBeiji  vs.  ROPEOK Technology Group

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.

ROPEOK Technology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ROPEOK Technology Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ROPEOK Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GigaDevice SemiconductorBei and ROPEOK Technology

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

The idea behind GigaDevice SemiconductorBeiji and ROPEOK Technology Group 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.