Correlation Between GSI Technology and East West

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

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

Diversification Opportunities for GSI Technology and East West

-0.5

Correlation Coefficient

GSI Technology  East West

Very good diversification

The 3 months correlation between GSI and East is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding GSI Technology and East West Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East West Bancorp 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 East West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East West Bancorp has no effect on the direction of GSI Technology i.e., GSI Technology and East West go up and down completely randomly.

Pair Corralation between GSI Technology and East West

Given the investment horizon of 90 days GSI Technology is expected to generate 3.23 times more return on investment than East West. However, GSI Technology is 3.23 times more volatile than East West Bancorp. It trades about -0.06 of its potential returns per unit of risk. East West Bancorp is currently generating about -0.41 per unit of risk. If you would invest  330.00  in GSI Technology on September 30, 2024 and sell it today you would lose (25.00) from holding GSI Technology or give up 7.58% of portfolio value over 90 days.

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

GSI Technology  vs.  East West Bancorp

GSI Technology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GSI Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, GSI Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

East West Bancorp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in East West Bancorp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental drivers, East West exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GSI Technology and East West

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

The idea behind GSI Technology and East West Bancorp 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.

Check out your portfolio center.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..