Correlation Between GigaMedia and Apple
Can any of the company-specific risk be diversified away by investing in both GigaMedia and Apple 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 Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and Apple Inc, you can compare the effects of market volatilities on GigaMedia and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and Apple.
Diversification Opportunities for GigaMedia and Apple
Poor diversification
The 3 months correlation between GigaMedia and Apple is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of GigaMedia i.e., GigaMedia and Apple go up and down completely randomly.
Pair Corralation between GigaMedia and Apple
Assuming the 90 days trading horizon GigaMedia is expected to generate 1.67 times more return on investment than Apple. However, GigaMedia is 1.67 times more volatile than Apple Inc. It trades about 0.18 of its potential returns per unit of risk. Apple Inc is currently generating about 0.13 per unit of risk. If you would invest 122.00 in GigaMedia on August 29, 2024 and sell it today you would earn a total of 11.00 from holding GigaMedia or generate 9.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. Apple Inc
Performance |
| Timeline |
| GigaMedia |
| Apple Inc |
GigaMedia and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and Apple
The main advantage of trading using opposite GigaMedia and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| GigaMedia vs. GAMING FAC SA | GigaMedia vs. Digilife Technologies Limited | GigaMedia vs. CENTURIA OFFICE REIT | GigaMedia vs. OFFICE DEPOT |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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