Correlation Between XLMedia PLC and GigaMedia
Can any of the company-specific risk be diversified away by investing in both XLMedia PLC 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 XLMedia PLC and GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XLMedia PLC and GigaMedia, you can compare the effects of market volatilities on XLMedia PLC 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 XLMedia PLC with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of XLMedia PLC and GigaMedia.
Diversification Opportunities for XLMedia PLC and GigaMedia
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between XLMedia and GigaMedia is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding XLMedia PLC and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and XLMedia PLC 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 XLMedia PLC 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 XLMedia PLC i.e., XLMedia PLC and GigaMedia go up and down completely randomly.
Pair Corralation between XLMedia PLC and GigaMedia
Assuming the 90 days horizon XLMedia PLC is expected to generate 4.66 times more return on investment than GigaMedia. However, XLMedia PLC is 4.66 times more volatile than GigaMedia. It trades about 0.01 of its potential returns per unit of risk. GigaMedia is currently generating about 0.0 per unit of risk. If you would invest 24.00 in XLMedia PLC on September 1, 2024 and sell it today you would lose (10.00) from holding XLMedia PLC or give up 41.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
XLMedia PLC vs. GigaMedia
Performance |
| Timeline |
| XLMedia PLC |
| GigaMedia |
XLMedia PLC and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XLMedia PLC and GigaMedia
The main advantage of trading using opposite XLMedia PLC and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XLMedia PLC 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.| XLMedia PLC vs. FLOW TRADERS LTD | XLMedia PLC vs. Auto Trader Group | XLMedia PLC vs. Carsales | XLMedia PLC vs. CarsalesCom |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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