Correlation Between GCT Semiconductor and Dow Jones
Can any of the company-specific risk be diversified away by investing in both GCT Semiconductor and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on GCT Semiconductor and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of GCT Semiconductor and Dow Jones.
Diversification Opportunities for GCT Semiconductor and Dow Jones
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GCT and Dow is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding GCT Semiconductor Holding and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of GCT Semiconductor i.e., GCT Semiconductor and Dow Jones go up and down completely randomly.
Pair Corralation between GCT Semiconductor and Dow Jones
Given the investment horizon of 90 days GCT Semiconductor Holding is expected to generate 5.58 times more return on investment than Dow Jones. However, GCT Semiconductor is 5.58 times more volatile than Dow Jones Industrial. It trades about 0.14 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.11 per unit of risk. If you would invest 229.00 in GCT Semiconductor Holding on October 21, 2024 and sell it today you would earn a total of 23.00 from holding GCT Semiconductor Holding or generate 10.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
GCT Semiconductor Holding vs. Dow Jones Industrial
Performance |
| Timeline |
GCT Semiconductor and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
GCT Semiconductor Holding
Pair trading matchups for GCT Semiconductor
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with GCT Semiconductor and Dow Jones
The main advantage of trading using opposite GCT Semiconductor and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GCT Semiconductor position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| GCT Semiconductor vs. MGIC Investment Corp | GCT Semiconductor vs. Emerson Radio | GCT Semiconductor vs. Sonos Inc | GCT Semiconductor vs. Academy Sports Outdoors |
| Dow Jones vs. SkyWest | Dow Jones vs. Air Transport Services | Dow Jones vs. LATAM Airlines Group | Dow Jones vs. Emerson Radio |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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