Correlation Between GCT Semiconductor and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both GCT Semiconductor and Arrow Electronics 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 GCT Semiconductor and Arrow Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GCT Semiconductor Holding and Arrow Electronics, you can compare the effects of market volatilities on GCT Semiconductor and Arrow Electronics 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 GCT Semiconductor with a short position of Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of GCT Semiconductor and Arrow Electronics.
Diversification Opportunities for GCT Semiconductor and Arrow Electronics
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GCT and Arrow is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding GCT Semiconductor Holding and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics and GCT Semiconductor 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 GCT Semiconductor Holding are associated (or correlated) with Arrow Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Electronics has no effect on the direction of GCT Semiconductor i.e., GCT Semiconductor and Arrow Electronics go up and down completely randomly.
Pair Corralation between GCT Semiconductor and Arrow Electronics
Given the investment horizon of 90 days GCT Semiconductor Holding is expected to generate 2.34 times more return on investment than Arrow Electronics. However, GCT Semiconductor is 2.34 times more volatile than Arrow Electronics. It trades about -0.01 of its potential returns per unit of risk. Arrow Electronics is currently generating about -0.05 per unit of risk. If you would invest 264.00 in GCT Semiconductor Holding on August 31, 2024 and sell it today you would lose (26.00) from holding GCT Semiconductor Holding or give up 9.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GCT Semiconductor Holding vs. Arrow Electronics
Performance |
| Timeline |
| GCT Semiconductor Holding |
| Arrow Electronics |
GCT Semiconductor and Arrow Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GCT Semiconductor and Arrow Electronics
The main advantage of trading using opposite GCT Semiconductor and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GCT Semiconductor position performs unexpectedly, Arrow Electronics 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 Arrow Electronics will offset losses from the drop in Arrow Electronics' long position.| GCT Semiconductor vs. National Beverage Corp | GCT Semiconductor vs. Bridgford Foods | GCT Semiconductor vs. Hasbro Inc | GCT Semiconductor vs. Marfrig Global Foods |
| Arrow Electronics vs. Insight Enterprises | Arrow Electronics vs. Synnex | Arrow Electronics vs. Climb Global Solutions | Arrow Electronics vs. ScanSource |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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