Correlation Between GigaMedia and Titan Machinery
Can any of the company-specific risk be diversified away by investing in both GigaMedia and Titan Machinery 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 Titan Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and Titan Machinery, you can compare the effects of market volatilities on GigaMedia and Titan Machinery 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 Titan Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and Titan Machinery.
Diversification Opportunities for GigaMedia and Titan Machinery
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GigaMedia and Titan is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and Titan Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Machinery 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 Titan Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Machinery has no effect on the direction of GigaMedia i.e., GigaMedia and Titan Machinery go up and down completely randomly.
Pair Corralation between GigaMedia and Titan Machinery
Assuming the 90 days trading horizon GigaMedia is expected to generate 2.57 times less return on investment than Titan Machinery. But when comparing it to its historical volatility, GigaMedia is 2.3 times less risky than Titan Machinery. It trades about 0.2 of its potential returns per unit of risk. Titan Machinery is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,280 in Titan Machinery on August 31, 2024 and sell it today you would earn a total of 240.00 from holding Titan Machinery or generate 18.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. Titan Machinery
Performance |
| Timeline |
| GigaMedia |
| Titan Machinery |
GigaMedia and Titan Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and Titan Machinery
The main advantage of trading using opposite GigaMedia and Titan Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, Titan Machinery 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 Titan Machinery will offset losses from the drop in Titan Machinery's long position.| GigaMedia vs. JJ SNACK FOODS | GigaMedia vs. MOLSON RS BEVERAGE | GigaMedia vs. Astral Foods Limited | GigaMedia vs. Zijin Mining Group |
| Titan Machinery vs. WATSCO INC B | Titan Machinery vs. Indutrade AB | Titan Machinery vs. Superior Plus Corp | Titan Machinery vs. NMI Holdings |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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