Correlation Between Globalfoundries and Zhibao Technology

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

By analyzing existing cross correlation between Globalfoundries and Zhibao Technology Class, you can compare the effects of market volatilities on Globalfoundries and Zhibao 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 Globalfoundries with a short position of Zhibao Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globalfoundries and Zhibao Technology.

Diversification Opportunities for Globalfoundries and Zhibao Technology

-0.54

Correlation Coefficient

Globalfoundries  Zhibao Technology

Excellent diversification

The 3 months correlation between Globalfoundries and Zhibao is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Globalfoundries and Zhibao Technology Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhibao Technology Class and Globalfoundries 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 Globalfoundries are associated (or correlated) with Zhibao Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhibao Technology Class has no effect on the direction of Globalfoundries i.e., Globalfoundries and Zhibao Technology go up and down completely randomly.

Pair Corralation between Globalfoundries and Zhibao Technology

Considering the 90-day investment horizon Globalfoundries is expected to generate 0.28 times more return on investment than Zhibao Technology. However, Globalfoundries is 3.57 times less risky than Zhibao Technology. It trades about -0.11 of its potential returns per unit of risk. Zhibao Technology Class is currently generating about -0.34 per unit of risk. If you would invest  4,504  in Globalfoundries on October 8, 2024 and sell it today you would lose (186.00) from holding Globalfoundries or give up 4.13% of portfolio value over 90 days.

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

Globalfoundries  vs.  Zhibao Technology Class

Globalfoundries

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Globalfoundries are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, Globalfoundries may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Zhibao Technology Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhibao Technology Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Globalfoundries and Zhibao Technology

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

The idea behind Globalfoundries and Zhibao Technology Class 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.