Correlation Between GigaMedia and Teradata Corp
Can any of the company-specific risk be diversified away by investing in both GigaMedia and Teradata Corp 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 Teradata Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and Teradata Corp, you can compare the effects of market volatilities on GigaMedia and Teradata Corp 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 Teradata Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and Teradata Corp.
Diversification Opportunities for GigaMedia and Teradata Corp
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GigaMedia and Teradata is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and Teradata Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradata 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 Teradata Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradata Corp has no effect on the direction of GigaMedia i.e., GigaMedia and Teradata Corp go up and down completely randomly.
Pair Corralation between GigaMedia and Teradata Corp
Assuming the 90 days trading horizon GigaMedia is expected to generate 0.91 times more return on investment than Teradata Corp. However, GigaMedia is 1.1 times less risky than Teradata Corp. It trades about 0.1 of its potential returns per unit of risk. Teradata Corp is currently generating about -0.01 per unit of risk. If you would invest 115.00 in GigaMedia on October 19, 2024 and sell it today you would earn a total of 33.00 from holding GigaMedia or generate 28.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. Teradata Corp
Performance |
| Timeline |
| GigaMedia |
| Teradata Corp |
GigaMedia and Teradata Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and Teradata Corp
The main advantage of trading using opposite GigaMedia and Teradata Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, Teradata Corp 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 Teradata Corp will offset losses from the drop in Teradata Corp's long position.| GigaMedia vs. VULCAN MATERIALS | GigaMedia vs. APPLIED MATERIALS | GigaMedia vs. Applied Materials | GigaMedia vs. Nordic Semiconductor ASA |
| Teradata Corp vs. Darden Restaurants | Teradata Corp vs. OPERA SOFTWARE | Teradata Corp vs. AEON METALS LTD | Teradata Corp vs. ADRIATIC METALS LS 013355 |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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