Correlation Between GSI Technology and Analog Devices

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

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

Diversification Opportunities for GSI Technology and Analog Devices

0.53

Correlation Coefficient

GSI Technology  Analog Devices

Very weak diversification

The 3 months correlation between GSI and Analog is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding GSI Technology and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices 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 Analog Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analog Devices has no effect on the direction of GSI Technology i.e., GSI Technology and Analog Devices go up and down completely randomly.

Pair Corralation between GSI Technology and Analog Devices

Given the investment horizon of 90 days GSI Technology is expected to generate 2.39 times more return on investment than Analog Devices. However, GSI Technology is 2.39 times more volatile than Analog Devices. It trades about 0.15 of its potential returns per unit of risk. Analog Devices is currently generating about 0.17 per unit of risk. If you would invest  314.00  in GSI Technology on May 1, 2025 and sell it today you would earn a total of  121.00  from holding GSI Technology or generate 38.54% return on investment over 90 days.

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

GSI Technology  vs.  Analog Devices

GSI Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GSI Technology are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward indicators, GSI Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Analog Devices

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Analog Devices are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent fundamental indicators, Analog Devices demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GSI Technology and Analog Devices

The main advantage of trading using opposite GSI Technology and Analog Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GSI Technology position performs unexpectedly, Analog Devices 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 Analog Devices will offset losses from the drop in Analog Devices' long position.

The idea behind GSI Technology and Analog Devices 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.