Correlation Between International Game and GigaMedia
Can any of the company-specific risk be diversified away by investing in both International Game 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 International Game and GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Game Technology and GigaMedia, you can compare the effects of market volatilities on International Game 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 International Game with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Game and GigaMedia.
Diversification Opportunities for International Game and GigaMedia
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between International and GigaMedia is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding International Game Technology and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and International Game 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 International Game Technology 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 International Game i.e., International Game and GigaMedia go up and down completely randomly.
Pair Corralation between International Game and GigaMedia
Assuming the 90 days horizon International Game Technology is expected to under-perform the GigaMedia. But the stock apears to be less risky and, when comparing its historical volatility, International Game Technology is 1.14 times less risky than GigaMedia. The stock trades about -0.09 of its potential returns per unit of risk. The GigaMedia is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 114.00 in GigaMedia on November 2, 2024 and sell it today you would earn a total of 27.00 from holding GigaMedia or generate 23.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Game Technology vs. GigaMedia
Performance |
| Timeline |
| International Game |
| GigaMedia |
International Game and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Game and GigaMedia
The main advantage of trading using opposite International Game and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Game 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.| International Game vs. Flutter Entertainment PLC | International Game vs. Churchill Downs Incorporated | International Game vs. La Franaise des | International Game vs. Scientific Games |
| GigaMedia vs. Fukuyama Transporting Co | GigaMedia vs. Gaztransport Technigaz SA | GigaMedia vs. BII Railway Transportation | GigaMedia vs. Semiconductor Manufacturing International |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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