Correlation Between GSI Technology and CEVA

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

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

Diversification Opportunities for GSI Technology and CEVA

0.72

Correlation Coefficient

GSI Technology  CEVA

Poor diversification

The 3 months correlation between GSI and CEVA is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding GSI Technology and CEVA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEVA Inc 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 CEVA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEVA Inc has no effect on the direction of GSI Technology i.e., GSI Technology and CEVA go up and down completely randomly.

Pair Corralation between GSI Technology and CEVA

Given the investment horizon of 90 days GSI Technology is expected to under-perform the CEVA. In addition to that, GSI Technology is 1.79 times more volatile than CEVA Inc. It trades about -0.03 of its total potential returns per unit of risk. CEVA Inc is currently generating about -0.05 per unit of volatility. If you would invest  3,237  in CEVA Inc on December 27, 2024 and sell it today you would lose (496.00) from holding CEVA Inc or give up 15.32% of portfolio value over 90 days.

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

GSI Technology  vs.  CEVA Inc

GSI Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days GSI Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

CEVA Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days CEVA Inc 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 CEVA

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

The idea behind GSI Technology and CEVA Inc 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.