Correlation Between GigaMedia and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both GigaMedia and Chesapeake Utilities 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 Chesapeake Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and Chesapeake Utilities, you can compare the effects of market volatilities on GigaMedia and Chesapeake Utilities 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 Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and Chesapeake Utilities.
Diversification Opportunities for GigaMedia and Chesapeake Utilities
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GigaMedia and Chesapeake is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities 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 Chesapeake Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Utilities has no effect on the direction of GigaMedia i.e., GigaMedia and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between GigaMedia and Chesapeake Utilities
Assuming the 90 days trading horizon GigaMedia is expected to generate 1.96 times less return on investment than Chesapeake Utilities. But when comparing it to its historical volatility, GigaMedia is 1.08 times less risky than Chesapeake Utilities. It trades about 0.2 of its potential returns per unit of risk. Chesapeake Utilities is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 10,700 in Chesapeake Utilities on September 2, 2024 and sell it today you would earn a total of 1,600 from holding Chesapeake Utilities or generate 14.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. Chesapeake Utilities
Performance |
| Timeline |
| GigaMedia |
| Chesapeake Utilities |
GigaMedia and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and Chesapeake Utilities
The main advantage of trading using opposite GigaMedia and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, Chesapeake Utilities 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 Chesapeake Utilities will offset losses from the drop in Chesapeake Utilities' long position.| GigaMedia vs. Boyd Gaming | GigaMedia vs. Charter Communications | GigaMedia vs. GAMESTOP | GigaMedia vs. FRACTAL GAMING GROUP |
| Chesapeake Utilities vs. CenterPoint Energy | Chesapeake Utilities vs. Snam SpA | Chesapeake Utilities vs. Superior Plus Corp | Chesapeake Utilities vs. NMI Holdings |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |