Correlation Between Advanced Micro and GSI Technology

Can any of the company-specific risk be diversified away by investing in both Advanced Micro 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 Advanced Micro and GSI Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Advanced Micro Devices and GSI Technology, you can compare the effects of market volatilities on Advanced Micro 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 Advanced Micro with a short position of GSI Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Micro and GSI Technology.

Diversification Opportunities for Advanced Micro and GSI Technology

0.56

Correlation Coefficient

Advanced Micro  GSI Technology

Very weak diversification

The 3 months correlation between Advanced and GSI is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Micro Devices and GSI Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSI Technology and Advanced Micro 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 Advanced Micro Devices 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 Advanced Micro i.e., Advanced Micro and GSI Technology go up and down completely randomly.

Pair Corralation between Advanced Micro and GSI Technology

Considering the 90-day investment horizon Advanced Micro is expected to generate 9.15 times less return on investment than GSI Technology. But when comparing it to its historical volatility, Advanced Micro Devices is 3.68 times less risky than GSI Technology. It trades about 0.02 of its potential returns per unit of risk. GSI Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  158.00  in GSI Technology on January 23, 2025 and sell it today you would earn a total of  116.00  from holding GSI Technology or generate 73.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Advanced Micro Devices  vs.  GSI Technology

Advanced Micro Devices

Risk-Adjusted Performance

Very Weak

Over the last 90 days Advanced Micro Devices has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

GSI Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days GSI Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in May 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Advanced Micro and GSI Technology

The main advantage of trading using opposite Advanced Micro and GSI Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Micro 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.

The idea behind Advanced Micro Devices and GSI Technology 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.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.