Correlation Between GigaDevice SemiconductorBei and Aba Chemicals
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By analyzing existing cross correlation between GigaDevice SemiconductorBeiji and Aba Chemicals Corp, you can compare the effects of market volatilities on GigaDevice SemiconductorBei and Aba Chemicals 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 Aba Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaDevice SemiconductorBei and Aba Chemicals.
Diversification Opportunities for GigaDevice SemiconductorBei and Aba Chemicals
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GigaDevice and Aba is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding GigaDevice SemiconductorBeiji and Aba Chemicals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aba Chemicals Corp 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 Aba Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aba Chemicals Corp has no effect on the direction of GigaDevice SemiconductorBei i.e., GigaDevice SemiconductorBei and Aba Chemicals go up and down completely randomly.
Pair Corralation between GigaDevice SemiconductorBei and Aba Chemicals
Assuming the 90 days trading horizon GigaDevice SemiconductorBeiji is expected to under-perform the Aba Chemicals. But the stock apears to be less risky and, when comparing its historical volatility, GigaDevice SemiconductorBeiji is 1.36 times less risky than Aba Chemicals. The stock trades about -0.3 of its potential returns per unit of risk. The Aba Chemicals Corp is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest 917.00 in Aba Chemicals Corp on September 13, 2024 and sell it today you would lose (97.00) from holding Aba Chemicals Corp or give up 10.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaDevice SemiconductorBeiji vs. Aba Chemicals Corp
Performance |
| Timeline |
| GigaDevice SemiconductorBei |
| Aba Chemicals Corp |
GigaDevice SemiconductorBei and Aba Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaDevice SemiconductorBei and Aba Chemicals
The main advantage of trading using opposite GigaDevice SemiconductorBei and Aba Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaDevice SemiconductorBei position performs unexpectedly, Aba Chemicals 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 Aba Chemicals will offset losses from the drop in Aba Chemicals' long position.The idea behind GigaDevice SemiconductorBeiji and Aba Chemicals Corp 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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Check out your portfolio center.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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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