Correlation Between PARKEN Sport and GigaMedia
Can any of the company-specific risk be diversified away by investing in both PARKEN Sport 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 PARKEN Sport and GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PARKEN Sport Entertainment and GigaMedia, you can compare the effects of market volatilities on PARKEN Sport 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 PARKEN Sport with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of PARKEN Sport and GigaMedia.
Diversification Opportunities for PARKEN Sport and GigaMedia
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PARKEN and GigaMedia is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding PARKEN Sport Entertainment and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and PARKEN Sport 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 PARKEN Sport Entertainment 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 PARKEN Sport i.e., PARKEN Sport and GigaMedia go up and down completely randomly.
Pair Corralation between PARKEN Sport and GigaMedia
Assuming the 90 days horizon PARKEN Sport Entertainment is expected to generate 4.97 times more return on investment than GigaMedia. However, PARKEN Sport is 4.97 times more volatile than GigaMedia. It trades about 0.06 of its potential returns per unit of risk. GigaMedia is currently generating about 0.03 per unit of risk. If you would invest 591.00 in PARKEN Sport Entertainment on September 12, 2024 and sell it today you would earn a total of 1,094 from holding PARKEN Sport Entertainment or generate 185.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PARKEN Sport Entertainment vs. GigaMedia
Performance |
| Timeline |
| PARKEN Sport Enterta |
| GigaMedia |
PARKEN Sport and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PARKEN Sport and GigaMedia
The main advantage of trading using opposite PARKEN Sport and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PARKEN Sport 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.| PARKEN Sport vs. The Walt Disney | PARKEN Sport vs. Charter Communications | PARKEN Sport vs. Warner Music Group | PARKEN Sport vs. Superior Plus Corp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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