Correlation Between GigaMedia and ECHO INVESTMENT
Can any of the company-specific risk be diversified away by investing in both GigaMedia and ECHO INVESTMENT 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 ECHO INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and ECHO INVESTMENT ZY, you can compare the effects of market volatilities on GigaMedia and ECHO INVESTMENT 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 ECHO INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and ECHO INVESTMENT.
Diversification Opportunities for GigaMedia and ECHO INVESTMENT
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GigaMedia and ECHO is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and ECHO INVESTMENT ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECHO INVESTMENT ZY 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 ECHO INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECHO INVESTMENT ZY has no effect on the direction of GigaMedia i.e., GigaMedia and ECHO INVESTMENT go up and down completely randomly.
Pair Corralation between GigaMedia and ECHO INVESTMENT
Assuming the 90 days trading horizon GigaMedia is expected to generate 1.33 times more return on investment than ECHO INVESTMENT. However, GigaMedia is 1.33 times more volatile than ECHO INVESTMENT ZY. It trades about 0.26 of its potential returns per unit of risk. ECHO INVESTMENT ZY is currently generating about 0.04 per unit of risk. If you would invest 120.00 in GigaMedia on August 25, 2024 and sell it today you would earn a total of 16.00 from holding GigaMedia or generate 13.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. ECHO INVESTMENT ZY
Performance |
| Timeline |
| GigaMedia |
| ECHO INVESTMENT ZY |
GigaMedia and ECHO INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and ECHO INVESTMENT
The main advantage of trading using opposite GigaMedia and ECHO INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, ECHO INVESTMENT 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 ECHO INVESTMENT will offset losses from the drop in ECHO INVESTMENT's long position.| GigaMedia vs. NXP Semiconductors NV | GigaMedia vs. Virtus Investment Partners | GigaMedia vs. Taiwan Semiconductor Manufacturing | GigaMedia vs. ECHO INVESTMENT ZY |
| ECHO INVESTMENT vs. Dis Fastigheter AB | ECHO INVESTMENT vs. Superior Plus Corp | ECHO INVESTMENT vs. NMI Holdings | ECHO INVESTMENT vs. Origin Agritech |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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