Correlation Between Heilongjiang Publishing and GigaDevice SemiconductorBei

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

By analyzing existing cross correlation between Heilongjiang Publishing Media and GigaDevice SemiconductorBeiji, you can compare the effects of market volatilities on Heilongjiang Publishing and GigaDevice SemiconductorBei 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 Heilongjiang Publishing with a short position of GigaDevice SemiconductorBei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heilongjiang Publishing and GigaDevice SemiconductorBei.

Diversification Opportunities for Heilongjiang Publishing and GigaDevice SemiconductorBei

0.61

Correlation Coefficient

Heilongjiang Publishing  GigaDevice SemiconductorBei

Poor diversification

The 3 months correlation between Heilongjiang and GigaDevice is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Heilongjiang Publishing Media and GigaDevice SemiconductorBeiji in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaDevice SemiconductorBei and Heilongjiang Publishing 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 Heilongjiang Publishing Media are associated (or correlated) with GigaDevice SemiconductorBei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GigaDevice SemiconductorBei has no effect on the direction of Heilongjiang Publishing i.e., Heilongjiang Publishing and GigaDevice SemiconductorBei go up and down completely randomly.

Pair Corralation between Heilongjiang Publishing and GigaDevice SemiconductorBei

Assuming the 90 days trading horizon Heilongjiang Publishing Media is expected to generate 1.03 times more return on investment than GigaDevice SemiconductorBei. However, Heilongjiang Publishing is 1.03 times more volatile than GigaDevice SemiconductorBeiji. It trades about 0.01 of its potential returns per unit of risk. GigaDevice SemiconductorBeiji is currently generating about -0.02 per unit of risk. If you would invest  1,751  in Heilongjiang Publishing Media on September 14, 2024 and sell it today you would lose (24.00) from holding Heilongjiang Publishing Media or give up 1.37% of portfolio value over 90 days.

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

Heilongjiang Publishing Media  vs.  GigaDevice SemiconductorBeiji

Heilongjiang Publishing

Risk-Adjusted Performance

15 of 100

Good

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

GigaDevice SemiconductorBei

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GigaDevice SemiconductorBeiji are ranked lower than 12 (%) 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.

Pair Trading with Heilongjiang Publishing and GigaDevice SemiconductorBei

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

The idea behind Heilongjiang Publishing Media and GigaDevice SemiconductorBeiji 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.