Correlation Between GigaMedia and LUMI GRUPPEN
Can any of the company-specific risk be diversified away by investing in both GigaMedia and LUMI GRUPPEN 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 LUMI GRUPPEN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and LUMI GRUPPEN AS, you can compare the effects of market volatilities on GigaMedia and LUMI GRUPPEN 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 LUMI GRUPPEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and LUMI GRUPPEN.
Diversification Opportunities for GigaMedia and LUMI GRUPPEN
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GigaMedia and LUMI is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and LUMI GRUPPEN AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LUMI GRUPPEN AS 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 LUMI GRUPPEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LUMI GRUPPEN AS has no effect on the direction of GigaMedia i.e., GigaMedia and LUMI GRUPPEN go up and down completely randomly.
Pair Corralation between GigaMedia and LUMI GRUPPEN
Assuming the 90 days trading horizon GigaMedia is expected to generate 1.01 times more return on investment than LUMI GRUPPEN. However, GigaMedia is 1.01 times more volatile than LUMI GRUPPEN AS. It trades about 0.02 of its potential returns per unit of risk. LUMI GRUPPEN AS is currently generating about -0.03 per unit of risk. If you would invest 140.00 in GigaMedia on November 6, 2024 and sell it today you would earn a total of 1.00 from holding GigaMedia or generate 0.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
GigaMedia vs. LUMI GRUPPEN AS
Performance |
| Timeline |
| GigaMedia |
| LUMI GRUPPEN AS |
GigaMedia and LUMI GRUPPEN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and LUMI GRUPPEN
The main advantage of trading using opposite GigaMedia and LUMI GRUPPEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, LUMI GRUPPEN 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 LUMI GRUPPEN will offset losses from the drop in LUMI GRUPPEN's long position.| GigaMedia vs. T Mobile | GigaMedia vs. COMMERCIAL VEHICLE | GigaMedia vs. Verizon Communications | GigaMedia vs. Tower One Wireless |
| LUMI GRUPPEN vs. PENN Entertainment | LUMI GRUPPEN vs. REMEDY ENTERTAINMENT OYJ | LUMI GRUPPEN vs. Globex Mining Enterprises | LUMI GRUPPEN vs. De Grey Mining |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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