Correlation Between GigaMedia and EMBARK EDUCATION
Can any of the company-specific risk be diversified away by investing in both GigaMedia and EMBARK EDUCATION 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 EMBARK EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and EMBARK EDUCATION LTD, you can compare the effects of market volatilities on GigaMedia and EMBARK EDUCATION 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 EMBARK EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and EMBARK EDUCATION.
Diversification Opportunities for GigaMedia and EMBARK EDUCATION
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GigaMedia and EMBARK is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and EMBARK EDUCATION LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMBARK EDUCATION LTD 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 EMBARK EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMBARK EDUCATION LTD has no effect on the direction of GigaMedia i.e., GigaMedia and EMBARK EDUCATION go up and down completely randomly.
Pair Corralation between GigaMedia and EMBARK EDUCATION
Assuming the 90 days trading horizon GigaMedia is expected to generate 2.28 times more return on investment than EMBARK EDUCATION. However, GigaMedia is 2.28 times more volatile than EMBARK EDUCATION LTD. It trades about 0.22 of its potential returns per unit of risk. EMBARK EDUCATION LTD is currently generating about 0.22 per unit of risk. If you would invest 123.00 in GigaMedia on September 1, 2024 and sell it today you would earn a total of 10.00 from holding GigaMedia or generate 8.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
GigaMedia vs. EMBARK EDUCATION LTD
Performance |
| Timeline |
| GigaMedia |
| EMBARK EDUCATION LTD |
GigaMedia and EMBARK EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and EMBARK EDUCATION
The main advantage of trading using opposite GigaMedia and EMBARK EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, EMBARK EDUCATION 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 EMBARK EDUCATION will offset losses from the drop in EMBARK EDUCATION's long position.| GigaMedia vs. Charter Communications | GigaMedia vs. COMBA TELECOM SYST | GigaMedia vs. Singapore Telecommunications Limited | GigaMedia vs. QUEEN S ROAD |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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