Correlation Between GigaMedia and MSAD INSURANCE
Can any of the company-specific risk be diversified away by investing in both GigaMedia and MSAD INSURANCE 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 MSAD INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and MSAD INSURANCE, you can compare the effects of market volatilities on GigaMedia and MSAD INSURANCE 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 MSAD INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and MSAD INSURANCE.
Diversification Opportunities for GigaMedia and MSAD INSURANCE
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GigaMedia and MSAD is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and MSAD INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSAD INSURANCE 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 MSAD INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSAD INSURANCE has no effect on the direction of GigaMedia i.e., GigaMedia and MSAD INSURANCE go up and down completely randomly.
Pair Corralation between GigaMedia and MSAD INSURANCE
Assuming the 90 days trading horizon GigaMedia is expected to generate 1.43 times more return on investment than MSAD INSURANCE. However, GigaMedia is 1.43 times more volatile than MSAD INSURANCE. It trades about 0.13 of its potential returns per unit of risk. MSAD INSURANCE is currently generating about 0.07 per unit of risk. If you would invest 115.00 in GigaMedia on September 12, 2024 and sell it today you would earn a total of 18.00 from holding GigaMedia or generate 15.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. MSAD INSURANCE
Performance |
| Timeline |
| GigaMedia |
| MSAD INSURANCE |
GigaMedia and MSAD INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and MSAD INSURANCE
The main advantage of trading using opposite GigaMedia and MSAD INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, MSAD INSURANCE 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 MSAD INSURANCE will offset losses from the drop in MSAD INSURANCE's long position.| GigaMedia vs. Titan Machinery | GigaMedia vs. AUST AGRICULTURAL | GigaMedia vs. North American Construction | GigaMedia vs. ALEFARM BREWING DK 05 |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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