Correlation Between GSI Technology and WiSA Technologies

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

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

Diversification Opportunities for GSI Technology and WiSA Technologies

0.25

Correlation Coefficient

GSI Technology  WiSA Technologies

Modest diversification

The 3 months correlation between GSI and WiSA is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding GSI Technology and WiSA Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WiSA Technologies 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 WiSA Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WiSA Technologies has no effect on the direction of GSI Technology i.e., GSI Technology and WiSA Technologies go up and down completely randomly.

Pair Corralation between GSI Technology and WiSA Technologies

Given the investment horizon of 90 days GSI Technology is expected to generate 3.17 times less return on investment than WiSA Technologies. But when comparing it to its historical volatility, GSI Technology is 5.19 times less risky than WiSA Technologies. It trades about 0.18 of its potential returns per unit of risk. WiSA Technologies is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  136.00  in WiSA Technologies on July 5, 2024 and sell it today you would earn a total of  31.00  from holding WiSA Technologies or generate 22.79% return on investment over 90 days.

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

GSI Technology  vs.  WiSA Technologies

GSI Technology

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GSI Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, GSI Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

WiSA Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WiSA Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with GSI Technology and WiSA Technologies

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

The idea behind GSI Technology and WiSA Technologies 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.