Correlation Between GigaMedia and CK HUTCHISON
Can any of the company-specific risk be diversified away by investing in both GigaMedia and CK HUTCHISON 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 CK HUTCHISON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and CK HUTCHISON HLDGS, you can compare the effects of market volatilities on GigaMedia and CK HUTCHISON 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 CK HUTCHISON. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and CK HUTCHISON.
Diversification Opportunities for GigaMedia and CK HUTCHISON
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GigaMedia and 2CKA is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and CK HUTCHISON HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CK HUTCHISON HLDGS 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 CK HUTCHISON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CK HUTCHISON HLDGS has no effect on the direction of GigaMedia i.e., GigaMedia and CK HUTCHISON go up and down completely randomly.
Pair Corralation between GigaMedia and CK HUTCHISON
Assuming the 90 days trading horizon GigaMedia is expected to generate 0.68 times more return on investment than CK HUTCHISON. However, GigaMedia is 1.48 times less risky than CK HUTCHISON. It trades about 0.04 of its potential returns per unit of risk. CK HUTCHISON HLDGS is currently generating about 0.02 per unit of risk. If you would invest 107.00 in GigaMedia on September 12, 2024 and sell it today you would earn a total of 26.00 from holding GigaMedia or generate 24.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. CK HUTCHISON HLDGS
Performance |
| Timeline |
| GigaMedia |
| CK HUTCHISON HLDGS |
GigaMedia and CK HUTCHISON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and CK HUTCHISON
The main advantage of trading using opposite GigaMedia and CK HUTCHISON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, CK HUTCHISON 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 CK HUTCHISON will offset losses from the drop in CK HUTCHISON's long position.The idea behind GigaMedia and CK HUTCHISON HLDGS 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.| CK HUTCHISON vs. TSOGO SUN GAMING | CK HUTCHISON vs. Media and Games | CK HUTCHISON vs. GAMESTOP | CK HUTCHISON vs. Boyd Gaming |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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