Correlation Between GigaMedia and Data#3
Can any of the company-specific risk be diversified away by investing in both GigaMedia and Data#3 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 Data#3 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and Data3 Limited, you can compare the effects of market volatilities on GigaMedia and Data#3 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 Data#3. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and Data#3.
Diversification Opportunities for GigaMedia and Data#3
Excellent diversification
The 3 months correlation between GigaMedia and Data#3 is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and Data3 Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data3 Limited 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 Data#3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data3 Limited has no effect on the direction of GigaMedia i.e., GigaMedia and Data#3 go up and down completely randomly.
Pair Corralation between GigaMedia and Data#3
Assuming the 90 days trading horizon GigaMedia is expected to under-perform the Data#3. But the stock apears to be less risky and, when comparing its historical volatility, GigaMedia is 1.91 times less risky than Data#3. The stock trades about -0.22 of its potential returns per unit of risk. The Data3 Limited is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 400.00 in Data3 Limited on November 27, 2024 and sell it today you would earn a total of 76.00 from holding Data3 Limited or generate 19.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. Data3 Limited
Performance |
| Timeline |
| GigaMedia |
| Data3 Limited |
GigaMedia and Data#3 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and Data#3
The main advantage of trading using opposite GigaMedia and Data#3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, Data#3 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 Data#3 will offset losses from the drop in Data#3's long position.| GigaMedia vs. Renesas Electronics | GigaMedia vs. BIOPHARMA CREDIT DL | GigaMedia vs. Samsung Electronics Co | GigaMedia vs. BANK OCHINA H |
| Data#3 vs. Accenture plc | Data#3 vs. International Business Machines | Data#3 vs. International Business Machines | Data#3 vs. Infosys Limited |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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