Correlation Between Data3 and GigaMedia
Can any of the company-specific risk be diversified away by investing in both Data3 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 Data3 and GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Data3 Limited and GigaMedia, you can compare the effects of market volatilities on Data3 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 Data3 with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Data3 and GigaMedia.
Diversification Opportunities for Data3 and GigaMedia
Weak diversification
The 3 months correlation between Data3 and GigaMedia is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Data3 Limited and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and Data3 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 Data3 Limited 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 Data3 i.e., Data3 and GigaMedia go up and down completely randomly.
Pair Corralation between Data3 and GigaMedia
Assuming the 90 days horizon Data3 is expected to generate 4.8 times less return on investment than GigaMedia. In addition to that, Data3 is 1.18 times more volatile than GigaMedia. It trades about 0.03 of its total potential returns per unit of risk. GigaMedia is currently generating about 0.16 per unit of volatility. If you would invest 118.00 in GigaMedia on August 29, 2024 and sell it today you would earn a total of 15.00 from holding GigaMedia or generate 12.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Data3 Limited vs. GigaMedia
Performance |
| Timeline |
| Data3 Limited |
| GigaMedia |
Data3 and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Data3 and GigaMedia
The main advantage of trading using opposite Data3 and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Data3 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.| Data3 vs. Accenture plc | Data3 vs. International Business Machines | Data3 vs. Superior Plus Corp | Data3 vs. SIVERS SEMICONDUCTORS AB |
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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