Correlation Between GigaMedia and Ares Management
Can any of the company-specific risk be diversified away by investing in both GigaMedia and Ares Management 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 Ares Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and Ares Management Corp, you can compare the effects of market volatilities on GigaMedia and Ares Management 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 Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and Ares Management.
Diversification Opportunities for GigaMedia and Ares Management
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GigaMedia and Ares is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and Ares Management Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Management Corp 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 Ares Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Management Corp has no effect on the direction of GigaMedia i.e., GigaMedia and Ares Management go up and down completely randomly.
Pair Corralation between GigaMedia and Ares Management
Assuming the 90 days trading horizon GigaMedia is expected to generate 1.74 times less return on investment than Ares Management. But when comparing it to its historical volatility, GigaMedia is 3.77 times less risky than Ares Management. It trades about 0.07 of its potential returns per unit of risk. Ares Management Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 16,763 in Ares Management Corp on September 26, 2024 and sell it today you would earn a total of 167.00 from holding Ares Management Corp or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. Ares Management Corp
Performance |
| Timeline |
| GigaMedia |
| Ares Management Corp |
GigaMedia and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and Ares Management
The main advantage of trading using opposite GigaMedia and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, Ares Management 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 Ares Management will offset losses from the drop in Ares Management's long position.The idea behind GigaMedia and Ares Management Corp 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.| Ares Management vs. Grupo Carso SAB | Ares Management vs. MUTUIONLINE | Ares Management vs. CECO ENVIRONMENTAL | Ares Management vs. RELIANCE STEEL AL |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| CEOs Directory Screen CEOs from public companies around the world |