Correlation Between East West and GSI Technology
Can any of the company-specific risk be diversified away by investing in both East West and GSI 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 East West and GSI Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East West Bancorp and GSI Technology, you can compare the effects of market volatilities on East West and GSI 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 East West with a short position of GSI Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of East West and GSI Technology.
Diversification Opportunities for East West and GSI Technology
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between East and GSI is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding East West Bancorp and GSI Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSI Technology and East West 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 East West Bancorp are associated (or correlated) with GSI Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSI Technology has no effect on the direction of East West i.e., East West and GSI Technology go up and down completely randomly.
Pair Corralation between East West and GSI Technology
Given the investment horizon of 90 days East West Bancorp is expected to generate 0.65 times more return on investment than GSI Technology. However, East West Bancorp is 1.53 times less risky than GSI Technology. It trades about 0.23 of its potential returns per unit of risk. GSI Technology is currently generating about 0.06 per unit of risk. If you would invest 9,694 in East West Bancorp on September 1, 2024 and sell it today you would earn a total of 1,274 from holding East West Bancorp or generate 13.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
East West Bancorp vs. GSI Technology
Performance |
| Timeline |
| East West Bancorp |
| GSI Technology |
East West and GSI Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East West and GSI Technology
The main advantage of trading using opposite East West and GSI Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East West position performs unexpectedly, GSI 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 GSI Technology will offset losses from the drop in GSI Technology's long position.| East West vs. Barclays PLC ADR | East West vs. UBS Group AG | East West vs. ING Group NV | East West vs. Citigroup |
| GSI Technology vs. SEALSQ Corp | GSI Technology vs. Nano Labs | GSI Technology vs. SemiLEDS | GSI Technology vs. Wisekey International Holding |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |