Correlation Between Shanghai Junshi and GigaDevice SemiconductorBei

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

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

Diversification Opportunities for Shanghai Junshi and GigaDevice SemiconductorBei

0.84

Correlation Coefficient

Shanghai Junshi  GigaDevice SemiconductorBei

Very poor diversification

The 3 months correlation between Shanghai and GigaDevice is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Junshi Biosciences and GigaDevice SemiconductorBeiji in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaDevice SemiconductorBei and Shanghai Junshi 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 Shanghai Junshi Biosciences 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 Shanghai Junshi i.e., Shanghai Junshi and GigaDevice SemiconductorBei go up and down completely randomly.

Pair Corralation between Shanghai Junshi and GigaDevice SemiconductorBei

Assuming the 90 days trading horizon Shanghai Junshi is expected to generate 1.81 times less return on investment than GigaDevice SemiconductorBei. In addition to that, Shanghai Junshi is 1.04 times more volatile than GigaDevice SemiconductorBeiji. It trades about 0.12 of its total potential returns per unit of risk. GigaDevice SemiconductorBeiji is currently generating about 0.22 per unit of volatility. If you would invest  6,529  in GigaDevice SemiconductorBeiji on September 20, 2024 and sell it today you would earn a total of  3,776  from holding GigaDevice SemiconductorBeiji or generate 57.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Shanghai Junshi Biosciences  vs.  GigaDevice SemiconductorBeiji

Shanghai Junshi Bios

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai Junshi Biosciences are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shanghai Junshi sustained solid returns over the last few months and may actually be approaching a breakup point.

GigaDevice SemiconductorBei

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GigaDevice SemiconductorBeiji are ranked lower than 17 (%) 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 Shanghai Junshi and GigaDevice SemiconductorBei

The main advantage of trading using opposite Shanghai Junshi and GigaDevice SemiconductorBei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Junshi 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 Shanghai Junshi Biosciences 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.