Correlation Between GCT Semiconductor and Infineon Technologies

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

By analyzing existing cross correlation between GCT Semiconductor Holding and Infineon Technologies AG, you can compare the effects of market volatilities on GCT Semiconductor and Infineon 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 GCT Semiconductor with a short position of Infineon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of GCT Semiconductor and Infineon Technologies.

Diversification Opportunities for GCT Semiconductor and Infineon Technologies

-0.43

Correlation Coefficient

GCT Semiconductor  Infineon Technologies

Very good diversification

The 3 months correlation between GCT and Infineon is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding GCT Semiconductor Holding and Infineon Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infineon Technologies and GCT Semiconductor 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 GCT Semiconductor Holding are associated (or correlated) with Infineon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infineon Technologies has no effect on the direction of GCT Semiconductor i.e., GCT Semiconductor and Infineon Technologies go up and down completely randomly.

Pair Corralation between GCT Semiconductor and Infineon Technologies

If you would invest  264.00  in GCT Semiconductor Holding on September 3, 2024 and sell it today you would lose (9.00) from holding GCT Semiconductor Holding or give up 3.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

GCT Semiconductor Holding  vs.  Infineon Technologies AG

GCT Semiconductor Holding

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GCT Semiconductor Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, GCT Semiconductor is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Infineon Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infineon Technologies AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Infineon Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GCT Semiconductor and Infineon Technologies

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

The idea behind GCT Semiconductor Holding and Infineon Technologies AG 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.