Correlation Between Boston Beer and GigaMedia
Can any of the company-specific risk be diversified away by investing in both Boston Beer 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 Boston Beer and GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boston Beer and GigaMedia, you can compare the effects of market volatilities on Boston Beer 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 Boston Beer with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and GigaMedia.
Diversification Opportunities for Boston Beer and GigaMedia
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Boston and GigaMedia is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding The Boston Beer and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and Boston Beer 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 The Boston Beer 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 Boston Beer i.e., Boston Beer and GigaMedia go up and down completely randomly.
Pair Corralation between Boston Beer and GigaMedia
Assuming the 90 days trading horizon The Boston Beer is expected to under-perform the GigaMedia. But the stock apears to be less risky and, when comparing its historical volatility, The Boston Beer is 1.74 times less risky than GigaMedia. The stock trades about -0.55 of its potential returns per unit of risk. The GigaMedia is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 140.00 in GigaMedia on November 1, 2024 and sell it today you would earn a total of 1.00 from holding GigaMedia or generate 0.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boston Beer vs. GigaMedia
Performance |
| Timeline |
| Boston Beer |
| GigaMedia |
Boston Beer and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and GigaMedia
The main advantage of trading using opposite Boston Beer and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer 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.| Boston Beer vs. Semiconductor Manufacturing International | Boston Beer vs. British American Tobacco | Boston Beer vs. Elmos Semiconductor SE | Boston Beer vs. SLR Investment Corp |
| GigaMedia vs. Apollo Investment Corp | GigaMedia vs. AOYAMA TRADING | GigaMedia vs. betterU Education Corp | GigaMedia vs. Gladstone 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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