Correlation Between Science Applications and GigaMedia
Can any of the company-specific risk be diversified away by investing in both Science Applications 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 Science Applications and GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Science Applications International and GigaMedia, you can compare the effects of market volatilities on Science Applications 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 Science Applications with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Science Applications and GigaMedia.
Diversification Opportunities for Science Applications and GigaMedia
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Science and GigaMedia is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Science Applications Internati and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and Science Applications 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 Science Applications International 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 Science Applications i.e., Science Applications and GigaMedia go up and down completely randomly.
Pair Corralation between Science Applications and GigaMedia
Assuming the 90 days trading horizon Science Applications International is expected to under-perform the GigaMedia. In addition to that, Science Applications is 6.13 times more volatile than GigaMedia. It trades about -0.31 of its total potential returns per unit of risk. GigaMedia is currently generating about -0.05 per unit of volatility. If you would invest 135.00 in GigaMedia on September 13, 2024 and sell it today you would lose (1.00) from holding GigaMedia or give up 0.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Science Applications Internati vs. GigaMedia
Performance |
| Timeline |
| Science Applications |
| GigaMedia |
Science Applications and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Science Applications and GigaMedia
The main advantage of trading using opposite Science Applications and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Science Applications 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.| Science Applications vs. PSI Software AG | Science Applications vs. Universal Display | Science Applications vs. JD SPORTS FASH | Science Applications vs. Constellation Software |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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