Correlation Between GSI Technology and Micron Technology
Can any of the company-specific risk be diversified away by investing in both GSI Technology and Micron 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 GSI Technology and Micron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GSI Technology and Micron Technology, you can compare the effects of market volatilities on GSI Technology and Micron 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 GSI Technology with a short position of Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of GSI Technology and Micron Technology.
Diversification Opportunities for GSI Technology and Micron Technology
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GSI and Micron is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding GSI Technology and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology and GSI Technology 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 GSI Technology are associated (or correlated) with Micron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micron Technology has no effect on the direction of GSI Technology i.e., GSI Technology and Micron Technology go up and down completely randomly.
Pair Corralation between GSI Technology and Micron Technology
Given the investment horizon of 90 days GSI Technology is expected to under-perform the Micron Technology. In addition to that, GSI Technology is 1.65 times more volatile than Micron Technology. It trades about -0.03 of its total potential returns per unit of risk. Micron Technology is currently generating about -0.03 per unit of volatility. If you would invest 12,270 in Micron Technology on September 3, 2024 and sell it today you would lose (2,475) from holding Micron Technology or give up 20.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GSI Technology vs. Micron Technology
Performance |
| Timeline |
| GSI Technology |
| Micron Technology |
GSI Technology and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GSI Technology and Micron Technology
The main advantage of trading using opposite GSI Technology and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GSI Technology position performs unexpectedly, Micron 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 Micron Technology will offset losses from the drop in Micron Technology's long position.| GSI Technology vs. SEALSQ Corp | GSI Technology vs. Nano Labs | GSI Technology vs. SemiLEDS | GSI Technology vs. Wisekey International Holding |
| Micron Technology vs. NVIDIA | Micron Technology vs. Intel | Micron Technology vs. Taiwan Semiconductor Manufacturing | Micron Technology vs. Marvell Technology Group |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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