Correlation Between GigaMedia and Consolidated Communications
Can any of the company-specific risk be diversified away by investing in both GigaMedia and Consolidated Communications 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 Consolidated Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and Consolidated Communications Holdings, you can compare the effects of market volatilities on GigaMedia and Consolidated Communications 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 Consolidated Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and Consolidated Communications.
Diversification Opportunities for GigaMedia and Consolidated Communications
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GigaMedia and Consolidated is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and Consolidated Communications Ho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Communications 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 Consolidated Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Communications has no effect on the direction of GigaMedia i.e., GigaMedia and Consolidated Communications go up and down completely randomly.
Pair Corralation between GigaMedia and Consolidated Communications
Assuming the 90 days trading horizon GigaMedia is expected to under-perform the Consolidated Communications. In addition to that, GigaMedia is 1.48 times more volatile than Consolidated Communications Holdings. It trades about -0.11 of its total potential returns per unit of risk. Consolidated Communications Holdings is currently generating about 0.2 per unit of volatility. If you would invest 436.00 in Consolidated Communications Holdings on September 21, 2024 and sell it today you would earn a total of 8.00 from holding Consolidated Communications Holdings or generate 1.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. Consolidated Communications Ho
Performance |
| Timeline |
| GigaMedia |
| Consolidated Communications |
GigaMedia and Consolidated Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and Consolidated Communications
The main advantage of trading using opposite GigaMedia and Consolidated Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, Consolidated Communications 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 Consolidated Communications will offset losses from the drop in Consolidated Communications' long position.| GigaMedia vs. ASSOC BR FOODS | GigaMedia vs. TYSON FOODS A | GigaMedia vs. ORMAT TECHNOLOGIES | GigaMedia vs. Amkor Technology |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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