Correlation Between TOWNSQUARE MEDIA and GigaMedia
Can any of the company-specific risk be diversified away by investing in both TOWNSQUARE MEDIA 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 TOWNSQUARE MEDIA and GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOWNSQUARE MEDIA INC and GigaMedia, you can compare the effects of market volatilities on TOWNSQUARE MEDIA 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 TOWNSQUARE MEDIA with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOWNSQUARE MEDIA and GigaMedia.
Diversification Opportunities for TOWNSQUARE MEDIA and GigaMedia
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between TOWNSQUARE and GigaMedia is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding TOWNSQUARE MEDIA INC and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and TOWNSQUARE MEDIA 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 TOWNSQUARE MEDIA INC 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 TOWNSQUARE MEDIA i.e., TOWNSQUARE MEDIA and GigaMedia go up and down completely randomly.
Pair Corralation between TOWNSQUARE MEDIA and GigaMedia
Assuming the 90 days trading horizon TOWNSQUARE MEDIA INC is expected to generate 2.2 times more return on investment than GigaMedia. However, TOWNSQUARE MEDIA is 2.2 times more volatile than GigaMedia. It trades about -0.05 of its potential returns per unit of risk. GigaMedia is currently generating about -0.22 per unit of risk. If you would invest 855.00 in TOWNSQUARE MEDIA INC on November 27, 2024 and sell it today you would lose (25.00) from holding TOWNSQUARE MEDIA INC or give up 2.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TOWNSQUARE MEDIA INC vs. GigaMedia
Performance |
| Timeline |
| TOWNSQUARE MEDIA INC |
| GigaMedia |
TOWNSQUARE MEDIA and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOWNSQUARE MEDIA and GigaMedia
The main advantage of trading using opposite TOWNSQUARE MEDIA and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOWNSQUARE MEDIA 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.| TOWNSQUARE MEDIA vs. PLANT VEDA FOODS | TOWNSQUARE MEDIA vs. Austevoll Seafood ASA | TOWNSQUARE MEDIA vs. SAN MIGUEL BREWERY | TOWNSQUARE MEDIA vs. THAI BEVERAGE |
| GigaMedia vs. Renesas Electronics | GigaMedia vs. BIOPHARMA CREDIT DL | GigaMedia vs. Samsung Electronics Co | GigaMedia vs. BANK OCHINA H |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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