Correlation Between Broadcom and GSI Technology

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

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

Diversification Opportunities for Broadcom and GSI Technology

0.61

Correlation Coefficient

Broadcom  GSI Technology

Poor diversification

The 3 months correlation between Broadcom and GSI is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Broadcom and GSI Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSI Technology and Broadcom 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 Broadcom 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 Broadcom i.e., Broadcom and GSI Technology go up and down completely randomly.

Pair Corralation between Broadcom and GSI Technology

Given the investment horizon of 90 days Broadcom is expected to generate 0.46 times more return on investment than GSI Technology. However, Broadcom is 2.18 times less risky than GSI Technology. It trades about 0.3 of its potential returns per unit of risk. GSI Technology is currently generating about 0.03 per unit of risk. If you would invest  20,433  in Broadcom on May 7, 2025 and sell it today you would earn a total of  8,860  from holding Broadcom or generate 43.36% return on investment over 90 days.

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

Broadcom  vs.  GSI Technology

Broadcom

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Broadcom are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Broadcom displayed solid returns over the last few months and may actually be approaching a breakup point.

GSI Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GSI Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward indicators, GSI Technology may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Broadcom and GSI Technology

The main advantage of trading using opposite Broadcom and GSI Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadcom 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 Broadcom 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.