Correlation Between DFS Furniture and GigaMedia
Can any of the company-specific risk be diversified away by investing in both DFS Furniture 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 DFS Furniture and GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DFS Furniture PLC and GigaMedia, you can compare the effects of market volatilities on DFS Furniture 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 DFS Furniture with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and GigaMedia.
Diversification Opportunities for DFS Furniture and GigaMedia
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DFS and GigaMedia is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and DFS Furniture 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 DFS Furniture PLC 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 DFS Furniture i.e., DFS Furniture and GigaMedia go up and down completely randomly.
Pair Corralation between DFS Furniture and GigaMedia
Assuming the 90 days trading horizon DFS Furniture PLC is expected to generate 3.19 times more return on investment than GigaMedia. However, DFS Furniture is 3.19 times more volatile than GigaMedia. It trades about 0.0 of its potential returns per unit of risk. GigaMedia is currently generating about -0.04 per unit of risk. If you would invest 156.00 in DFS Furniture PLC on December 8, 2024 and sell it today you would lose (1.00) from holding DFS Furniture PLC or give up 0.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DFS Furniture PLC vs. GigaMedia
Performance |
| Timeline |
| DFS Furniture PLC |
| GigaMedia |
DFS Furniture and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFS Furniture and GigaMedia
The main advantage of trading using opposite DFS Furniture and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture 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.| DFS Furniture vs. Hua Hong Semiconductor | ||
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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