Correlation Between GigaMedia and Novanta
Can any of the company-specific risk be diversified away by investing in both GigaMedia and Novanta 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 Novanta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and Novanta, you can compare the effects of market volatilities on GigaMedia and Novanta 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 Novanta. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and Novanta.
Diversification Opportunities for GigaMedia and Novanta
Weak diversification
The 3 months correlation between GigaMedia and Novanta is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and Novanta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novanta 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 Novanta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novanta has no effect on the direction of GigaMedia i.e., GigaMedia and Novanta go up and down completely randomly.
Pair Corralation between GigaMedia and Novanta
Assuming the 90 days trading horizon GigaMedia is expected to generate 0.71 times more return on investment than Novanta. However, GigaMedia is 1.41 times less risky than Novanta. It trades about 0.04 of its potential returns per unit of risk. Novanta is currently generating about 0.02 per unit of risk. If you would invest 106.00 in GigaMedia on September 3, 2024 and sell it today you would earn a total of 27.00 from holding GigaMedia or generate 25.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. Novanta
Performance |
| Timeline |
| GigaMedia |
| Novanta |
GigaMedia and Novanta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and Novanta
The main advantage of trading using opposite GigaMedia and Novanta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, Novanta 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 Novanta will offset losses from the drop in Novanta's long position.| GigaMedia vs. Autohome ADR | GigaMedia vs. Sixt Leasing SE | GigaMedia vs. Canadian Utilities Limited | GigaMedia vs. DFS Furniture PLC |
| Novanta vs. HEXAGON AB ADR1 | Novanta vs. Teledyne Technologies Incorporated | Novanta vs. Trimble | Novanta vs. MKS Instruments |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |