Correlation Between GigaMedia and NEXON
Can any of the company-specific risk be diversified away by investing in both GigaMedia and NEXON 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 NEXON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and NEXON Co, you can compare the effects of market volatilities on GigaMedia and NEXON 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 NEXON. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and NEXON.
Diversification Opportunities for GigaMedia and NEXON
Excellent diversification
The 3 months correlation between GigaMedia and NEXON is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and NEXON Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXON 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 NEXON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXON has no effect on the direction of GigaMedia i.e., GigaMedia and NEXON go up and down completely randomly.
Pair Corralation between GigaMedia and NEXON
Assuming the 90 days trading horizon GigaMedia is expected to generate 1.37 times more return on investment than NEXON. However, GigaMedia is 1.37 times more volatile than NEXON Co. It trades about 0.09 of its potential returns per unit of risk. NEXON Co is currently generating about -0.19 per unit of risk. If you would invest 140.00 in GigaMedia on October 26, 2024 and sell it today you would earn a total of 6.00 from holding GigaMedia or generate 4.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. NEXON Co
Performance |
| Timeline |
| GigaMedia |
| NEXON |
GigaMedia and NEXON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and NEXON
The main advantage of trading using opposite GigaMedia and NEXON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, NEXON 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 NEXON will offset losses from the drop in NEXON's long position.| GigaMedia vs. MOLSON RS BEVERAGE | GigaMedia vs. Suntory Beverage Food | GigaMedia vs. USWE SPORTS AB | GigaMedia vs. SAN MIGUEL BREWERY |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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