Correlation Between Materialise and GigaMedia
Can any of the company-specific risk be diversified away by investing in both Materialise and GigaMedia 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 Materialise and GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Materialise NV and GigaMedia, you can compare the effects of market volatilities on Materialise and GigaMedia 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 Materialise with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materialise and GigaMedia.
Diversification Opportunities for Materialise and GigaMedia
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Materialise and GigaMedia is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Materialise NV and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and Materialise 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 Materialise NV are associated (or correlated) with GigaMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GigaMedia has no effect on the direction of Materialise i.e., Materialise and GigaMedia go up and down completely randomly.
Pair Corralation between Materialise and GigaMedia
Assuming the 90 days trading horizon Materialise NV is expected to generate 1.27 times more return on investment than GigaMedia. However, Materialise is 1.27 times more volatile than GigaMedia. It trades about 0.22 of its potential returns per unit of risk. GigaMedia is currently generating about 0.02 per unit of risk. If you would invest 685.00 in Materialise NV on November 3, 2024 and sell it today you would earn a total of 120.00 from holding Materialise NV or generate 17.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Materialise NV vs. GigaMedia
Performance |
| Timeline |
| Materialise NV |
| GigaMedia |
Materialise and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Materialise and GigaMedia
The main advantage of trading using opposite Materialise and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Materialise position performs unexpectedly, GigaMedia 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 GigaMedia will offset losses from the drop in GigaMedia's long position.| Materialise vs. BOS BETTER ONLINE | Materialise vs. Lamar Advertising | Materialise vs. Yanzhou Coal Mining | Materialise vs. MCEWEN MINING INC |
| GigaMedia vs. FIREWEED METALS P | GigaMedia vs. ADRIATIC METALS LS 013355 | GigaMedia vs. PENN Entertainment | GigaMedia vs. Nippon Light Metal |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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