Correlation Between BNP Paribas and GigaMedia
Can any of the company-specific risk be diversified away by investing in both BNP Paribas 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 BNP Paribas and GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BNP Paribas SA and GigaMedia, you can compare the effects of market volatilities on BNP Paribas 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 BNP Paribas with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and GigaMedia.
Diversification Opportunities for BNP Paribas and GigaMedia
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BNP and GigaMedia is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas SA and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and BNP Paribas 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 BNP Paribas SA 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 BNP Paribas i.e., BNP Paribas and GigaMedia go up and down completely randomly.
Pair Corralation between BNP Paribas and GigaMedia
Assuming the 90 days trading horizon BNP Paribas SA is expected to generate 0.95 times more return on investment than GigaMedia. However, BNP Paribas SA is 1.05 times less risky than GigaMedia. It trades about 0.03 of its potential returns per unit of risk. GigaMedia is currently generating about 0.02 per unit of risk. If you would invest 4,886 in BNP Paribas SA on August 25, 2024 and sell it today you would earn a total of 809.00 from holding BNP Paribas SA or generate 16.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BNP Paribas SA vs. GigaMedia
Performance |
| Timeline |
| BNP Paribas SA |
| GigaMedia |
BNP Paribas and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNP Paribas and GigaMedia
The main advantage of trading using opposite BNP Paribas and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNP Paribas 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.| BNP Paribas vs. GigaMedia | BNP Paribas vs. Universal Entertainment | BNP Paribas vs. PT Global Mediacom | BNP Paribas vs. Ryanair Holdings plc |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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