Correlation Between GigaMedia and CANON MARKETING
Can any of the company-specific risk be diversified away by investing in both GigaMedia and CANON MARKETING 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 CANON MARKETING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and CANON MARKETING JP, you can compare the effects of market volatilities on GigaMedia and CANON MARKETING 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 CANON MARKETING. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and CANON MARKETING.
Diversification Opportunities for GigaMedia and CANON MARKETING
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GigaMedia and CANON is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and CANON MARKETING JP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CANON MARKETING JP 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 CANON MARKETING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CANON MARKETING JP has no effect on the direction of GigaMedia i.e., GigaMedia and CANON MARKETING go up and down completely randomly.
Pair Corralation between GigaMedia and CANON MARKETING
Assuming the 90 days trading horizon GigaMedia is expected to generate 1.71 times less return on investment than CANON MARKETING. In addition to that, GigaMedia is 1.04 times more volatile than CANON MARKETING JP. It trades about 0.04 of its total potential returns per unit of risk. CANON MARKETING JP is currently generating about 0.07 per unit of volatility. If you would invest 2,040 in CANON MARKETING JP on September 19, 2024 and sell it today you would earn a total of 1,140 from holding CANON MARKETING JP or generate 55.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
GigaMedia vs. CANON MARKETING JP
Performance |
| Timeline |
| GigaMedia |
| CANON MARKETING JP |
GigaMedia and CANON MARKETING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and CANON MARKETING
The main advantage of trading using opposite GigaMedia and CANON MARKETING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, CANON MARKETING 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 CANON MARKETING will offset losses from the drop in CANON MARKETING's long position.The idea behind GigaMedia and CANON MARKETING JP pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| CANON MARKETING vs. National Beverage Corp | CANON MARKETING vs. UET United Electronic | CANON MARKETING vs. NorAm Drilling AS | CANON MARKETING vs. Molson Coors Beverage |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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