Correlation Between GigaMedia and IDP EDUCATION
Can any of the company-specific risk be diversified away by investing in both GigaMedia and IDP EDUCATION 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 GigaMedia and IDP EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and IDP EDUCATION LTD, you can compare the effects of market volatilities on GigaMedia and IDP EDUCATION 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 GigaMedia with a short position of IDP EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and IDP EDUCATION.
Diversification Opportunities for GigaMedia and IDP EDUCATION
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GigaMedia and IDP is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and IDP EDUCATION LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDP EDUCATION LTD and GigaMedia 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 GigaMedia are associated (or correlated) with IDP EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDP EDUCATION LTD has no effect on the direction of GigaMedia i.e., GigaMedia and IDP EDUCATION go up and down completely randomly.
Pair Corralation between GigaMedia and IDP EDUCATION
Assuming the 90 days trading horizon GigaMedia is expected to generate 1.65 times more return on investment than IDP EDUCATION. However, GigaMedia is 1.65 times more volatile than IDP EDUCATION LTD. It trades about 0.25 of its potential returns per unit of risk. IDP EDUCATION LTD is currently generating about 0.03 per unit of risk. If you would invest 120.00 in GigaMedia on August 26, 2024 and sell it today you would earn a total of 15.00 from holding GigaMedia or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. IDP EDUCATION LTD
Performance |
| Timeline |
| GigaMedia |
| IDP EDUCATION LTD |
GigaMedia and IDP EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and IDP EDUCATION
The main advantage of trading using opposite GigaMedia and IDP EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, IDP EDUCATION 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 IDP EDUCATION will offset losses from the drop in IDP EDUCATION's long position.The idea behind GigaMedia and IDP EDUCATION LTD pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| IDP EDUCATION vs. GigaMedia | IDP EDUCATION vs. DOCDATA | IDP EDUCATION vs. ANGLER GAMING PLC | IDP EDUCATION vs. Fidelity National Information |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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