Correlation Between GFL ENVIRONM and GigaMedia
Can any of the company-specific risk be diversified away by investing in both GFL ENVIRONM 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 GFL ENVIRONM and GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GFL ENVIRONM and GigaMedia, you can compare the effects of market volatilities on GFL ENVIRONM 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 GFL ENVIRONM with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of GFL ENVIRONM and GigaMedia.
Diversification Opportunities for GFL ENVIRONM and GigaMedia
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GFL and GigaMedia is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding GFL ENVIRONM and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and GFL ENVIRONM 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 GFL ENVIRONM 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 GFL ENVIRONM i.e., GFL ENVIRONM and GigaMedia go up and down completely randomly.
Pair Corralation between GFL ENVIRONM and GigaMedia
Assuming the 90 days horizon GFL ENVIRONM is expected to generate 1.4 times more return on investment than GigaMedia. However, GFL ENVIRONM is 1.4 times more volatile than GigaMedia. It trades about 0.07 of its potential returns per unit of risk. GigaMedia is currently generating about 0.03 per unit of risk. If you would invest 3,094 in GFL ENVIRONM on September 4, 2024 and sell it today you would earn a total of 1,426 from holding GFL ENVIRONM or generate 46.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GFL ENVIRONM vs. GigaMedia
Performance |
| Timeline |
| GFL ENVIRONM |
| GigaMedia |
GFL ENVIRONM and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GFL ENVIRONM and GigaMedia
The main advantage of trading using opposite GFL ENVIRONM and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GFL ENVIRONM 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.| GFL ENVIRONM vs. Waste Management | GFL ENVIRONM vs. Republic Services | GFL ENVIRONM vs. Waste Connections | GFL ENVIRONM vs. Veolia Environnement SA |
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 Stocks Directory module to find actively traded stocks across global markets.
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