Correlation Between Canadian Utilities and GigaMedia
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities 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 Canadian Utilities and GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Utilities Limited and GigaMedia, you can compare the effects of market volatilities on Canadian Utilities 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 Canadian Utilities with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and GigaMedia.
Diversification Opportunities for Canadian Utilities and GigaMedia
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Canadian and GigaMedia is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and Canadian Utilities 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 Canadian Utilities Limited 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 Canadian Utilities i.e., Canadian Utilities and GigaMedia go up and down completely randomly.
Pair Corralation between Canadian Utilities and GigaMedia
Assuming the 90 days horizon Canadian Utilities Limited is expected to generate 0.72 times more return on investment than GigaMedia. However, Canadian Utilities Limited is 1.39 times less risky than GigaMedia. It trades about 0.13 of its potential returns per unit of risk. GigaMedia is currently generating about 0.09 per unit of risk. If you would invest 2,007 in Canadian Utilities Limited on September 3, 2024 and sell it today you would earn a total of 392.00 from holding Canadian Utilities Limited or generate 19.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Utilities Limited vs. GigaMedia
Performance |
| Timeline |
| Canadian Utilities |
| GigaMedia |
Canadian Utilities and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Utilities and GigaMedia
The main advantage of trading using opposite Canadian Utilities and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities 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.| Canadian Utilities vs. MAVEN WIRELESS SWEDEN | Canadian Utilities vs. Citic Telecom International | Canadian Utilities vs. Tower One Wireless | Canadian Utilities vs. Chunghwa Telecom Co |
| GigaMedia vs. Autohome ADR | GigaMedia vs. Sixt Leasing SE | GigaMedia vs. Canadian Utilities Limited | GigaMedia vs. DFS Furniture 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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