Correlation Between VIRGIN WINES and GigaMedia

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Can any of the company-specific risk be diversified away by investing in both VIRGIN WINES 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 VIRGIN WINES and GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VIRGIN WINES UK and GigaMedia, you can compare the effects of market volatilities on VIRGIN WINES 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 VIRGIN WINES with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIRGIN WINES and GigaMedia.

Diversification Opportunities for VIRGIN WINES and GigaMedia

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between VIRGIN and GigaMedia is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding VIRGIN WINES UK and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and VIRGIN WINES 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 VIRGIN WINES UK 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 VIRGIN WINES i.e., VIRGIN WINES and GigaMedia go up and down completely randomly.

Pair Corralation between VIRGIN WINES and GigaMedia

Assuming the 90 days horizon VIRGIN WINES is expected to generate 5.95 times less return on investment than GigaMedia. But when comparing it to its historical volatility, VIRGIN WINES UK is 3.06 times less risky than GigaMedia. It trades about 0.02 of its potential returns per unit of risk. GigaMedia is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  108.00  in GigaMedia on September 17, 2024 and sell it today you would earn a total of  25.00  from holding GigaMedia or generate 23.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy99.8%
ValuesDaily Returns

VIRGIN WINES UK  vs.  GigaMedia

 Performance 
       Timeline  
VIRGIN WINES UK 

Risk-Adjusted Performance

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Over the last 90 days VIRGIN WINES UK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, VIRGIN WINES is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
GigaMedia 

Risk-Adjusted Performance

11 of 100

 
Weak
 
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Good
Compared to the overall equity markets, risk-adjusted returns on investments in GigaMedia are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, GigaMedia unveiled solid returns over the last few months and may actually be approaching a breakup point.

VIRGIN WINES and GigaMedia Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with VIRGIN WINES and GigaMedia

The main advantage of trading using opposite VIRGIN WINES and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIRGIN WINES 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.
The idea behind VIRGIN WINES UK and GigaMedia pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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