Correlation Between GCT Semiconductor and Hudbay Minerals

Can any of the company-specific risk be diversified away by investing in both GCT Semiconductor and Hudbay Minerals 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 Hudbay Minerals 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 Hudbay Minerals, you can compare the effects of market volatilities on GCT Semiconductor and Hudbay Minerals 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 Hudbay Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of GCT Semiconductor and Hudbay Minerals.

Diversification Opportunities for GCT Semiconductor and Hudbay Minerals

-0.15

Correlation Coefficient

GCT Semiconductor  Hudbay Minerals

Good diversification

The 3 months correlation between GCT and Hudbay is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding GCT Semiconductor Holding and Hudbay Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudbay Minerals 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 Hudbay Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hudbay Minerals has no effect on the direction of GCT Semiconductor i.e., GCT Semiconductor and Hudbay Minerals go up and down completely randomly.

Pair Corralation between GCT Semiconductor and Hudbay Minerals

Given the investment horizon of 90 days GCT Semiconductor Holding is expected to generate 23.99 times more return on investment than Hudbay Minerals. However, GCT Semiconductor is 23.99 times more volatile than Hudbay Minerals. It trades about 0.09 of its potential returns per unit of risk. Hudbay Minerals is currently generating about 0.09 per unit of risk. If you would invest  1,049  in GCT Semiconductor Holding on March 5, 2024 and sell it today you would lose (595.00) from holding GCT Semiconductor Holding or give up 56.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	10.53%
Values	Daily Returns

GCT Semiconductor Holding  vs.  Hudbay Minerals

GCT Semiconductor Holding

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GCT Semiconductor Holding are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, GCT Semiconductor unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hudbay Minerals

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hudbay Minerals are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental drivers, Hudbay Minerals displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GCT Semiconductor and Hudbay Minerals

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

The idea behind GCT Semiconductor Holding and Hudbay Minerals 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 Global Correlations module to find global opportunities by holding instruments from different markets.