Correlation Between GM and GCT Semiconductor
Can any of the company-specific risk be diversified away by investing in both GM and GCT Semiconductor 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 GM and GCT Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and GCT Semiconductor Holding, you can compare the effects of market volatilities on GM and GCT Semiconductor 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 GM with a short position of GCT Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and GCT Semiconductor.
Diversification Opportunities for GM and GCT Semiconductor
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and GCT is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and GCT Semiconductor Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GCT Semiconductor Holding and GM 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 General Motors are associated (or correlated) with GCT Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GCT Semiconductor Holding has no effect on the direction of GM i.e., GM and GCT Semiconductor go up and down completely randomly.
Pair Corralation between GM and GCT Semiconductor
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.52 times more return on investment than GCT Semiconductor. However, General Motors is 1.91 times less risky than GCT Semiconductor. It trades about 0.13 of its potential returns per unit of risk. GCT Semiconductor Holding is currently generating about -0.03 per unit of risk. If you would invest 5,154 in General Motors on August 30, 2024 and sell it today you would earn a total of 396.00 from holding General Motors or generate 7.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. GCT Semiconductor Holding
Performance |
| Timeline |
| General Motors |
| GCT Semiconductor Holding |
GM and GCT Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and GCT Semiconductor
The main advantage of trading using opposite GM and GCT Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, GCT Semiconductor 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 GCT Semiconductor will offset losses from the drop in GCT Semiconductor's long position.The idea behind General Motors and GCT Semiconductor Holding 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.| GCT Semiconductor vs. First Solar | GCT Semiconductor vs. Sunrun Inc | GCT Semiconductor vs. Canadian Solar | GCT Semiconductor vs. SolarEdge Technologies |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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