Correlation Between ECHO INVESTMENT and GigaMedia
Can any of the company-specific risk be diversified away by investing in both ECHO INVESTMENT 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 ECHO INVESTMENT and GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECHO INVESTMENT ZY and GigaMedia, you can compare the effects of market volatilities on ECHO INVESTMENT 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 ECHO INVESTMENT with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECHO INVESTMENT and GigaMedia.
Diversification Opportunities for ECHO INVESTMENT and GigaMedia
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ECHO and GigaMedia is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding ECHO INVESTMENT ZY and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and ECHO INVESTMENT 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 ECHO INVESTMENT ZY 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 ECHO INVESTMENT i.e., ECHO INVESTMENT and GigaMedia go up and down completely randomly.
Pair Corralation between ECHO INVESTMENT and GigaMedia
Assuming the 90 days horizon ECHO INVESTMENT ZY is expected to under-perform the GigaMedia. But the stock apears to be less risky and, when comparing its historical volatility, ECHO INVESTMENT ZY is 1.3 times less risky than GigaMedia. The stock trades about -0.04 of its potential returns per unit of risk. The GigaMedia is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 122.00 in GigaMedia on August 29, 2024 and sell it today you would earn a total of 11.00 from holding GigaMedia or generate 9.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECHO INVESTMENT ZY vs. GigaMedia
Performance |
| Timeline |
| ECHO INVESTMENT ZY |
| GigaMedia |
ECHO INVESTMENT and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECHO INVESTMENT and GigaMedia
The main advantage of trading using opposite ECHO INVESTMENT and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECHO INVESTMENT 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.| ECHO INVESTMENT vs. Superior Plus Corp | ECHO INVESTMENT vs. NMI Holdings | ECHO INVESTMENT vs. Origin Agritech | ECHO INVESTMENT vs. SIVERS SEMICONDUCTORS AB |
| GigaMedia vs. GAMING FAC SA | GigaMedia vs. Digilife Technologies Limited | GigaMedia vs. CENTURIA OFFICE REIT | GigaMedia vs. OFFICE DEPOT |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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