Correlation Between Commercial Vehicle and GigaMedia
Can any of the company-specific risk be diversified away by investing in both Commercial Vehicle 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 Commercial Vehicle and GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commercial Vehicle Group and GigaMedia, you can compare the effects of market volatilities on Commercial Vehicle 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 Commercial Vehicle with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial Vehicle and GigaMedia.
Diversification Opportunities for Commercial Vehicle and GigaMedia
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Commercial and GigaMedia is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Vehicle Group and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and Commercial Vehicle 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 Commercial Vehicle Group 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 Commercial Vehicle i.e., Commercial Vehicle and GigaMedia go up and down completely randomly.
Pair Corralation between Commercial Vehicle and GigaMedia
Assuming the 90 days trading horizon Commercial Vehicle Group is expected to under-perform the GigaMedia. In addition to that, Commercial Vehicle is 1.86 times more volatile than GigaMedia. It trades about -0.2 of its total potential returns per unit of risk. GigaMedia is currently generating about 0.26 per unit of volatility. If you would invest 120.00 in GigaMedia on August 25, 2024 and sell it today you would earn a total of 16.00 from holding GigaMedia or generate 13.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commercial Vehicle Group vs. GigaMedia
Performance |
| Timeline |
| Commercial Vehicle |
| GigaMedia |
Commercial Vehicle and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial Vehicle and GigaMedia
The main advantage of trading using opposite Commercial Vehicle and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial Vehicle 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.| Commercial Vehicle vs. Adtalem Global Education | Commercial Vehicle vs. STRAYER EDUCATION | Commercial Vehicle vs. Southwest Airlines Co | Commercial Vehicle vs. Lendlease Group |
| GigaMedia vs. NXP Semiconductors NV | GigaMedia vs. Virtus Investment Partners | GigaMedia vs. Taiwan Semiconductor Manufacturing | GigaMedia vs. ECHO INVESTMENT ZY |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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