Correlation Between KIMBALL ELECTRONICS and GigaMedia
Can any of the company-specific risk be diversified away by investing in both KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS and GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KIMBALL ELECTRONICS and GigaMedia, you can compare the effects of market volatilities on KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of KIMBALL ELECTRONICS and GigaMedia.
Diversification Opportunities for KIMBALL ELECTRONICS and GigaMedia
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KIMBALL and GigaMedia is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding KIMBALL ELECTRONICS and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS i.e., KIMBALL ELECTRONICS and GigaMedia go up and down completely randomly.
Pair Corralation between KIMBALL ELECTRONICS and GigaMedia
Assuming the 90 days horizon KIMBALL ELECTRONICS is expected to generate 9.31 times less return on investment than GigaMedia. But when comparing it to its historical volatility, KIMBALL ELECTRONICS is 1.43 times less risky than GigaMedia. It trades about 0.02 of its potential returns per unit of risk. GigaMedia is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 133.00 in GigaMedia on October 30, 2024 and sell it today you would earn a total of 12.00 from holding GigaMedia or generate 9.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KIMBALL ELECTRONICS vs. GigaMedia
Performance |
| Timeline |
| KIMBALL ELECTRONICS |
| GigaMedia |
KIMBALL ELECTRONICS and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KIMBALL ELECTRONICS and GigaMedia
The main advantage of trading using opposite KIMBALL ELECTRONICS and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KIMBALL ELECTRONICS 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.| KIMBALL ELECTRONICS vs. Treasury Wine Estates | KIMBALL ELECTRONICS vs. NAKED WINES PLC | KIMBALL ELECTRONICS vs. GameStop Corp | KIMBALL ELECTRONICS vs. Media and Games |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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