Correlation Between GigaMedia and COSTCO WHOLESALE
Can any of the company-specific risk be diversified away by investing in both GigaMedia and COSTCO WHOLESALE 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 COSTCO WHOLESALE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and COSTCO WHOLESALE CDR, you can compare the effects of market volatilities on GigaMedia and COSTCO WHOLESALE 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 COSTCO WHOLESALE. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and COSTCO WHOLESALE.
Diversification Opportunities for GigaMedia and COSTCO WHOLESALE
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GigaMedia and COSTCO is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and COSTCO WHOLESALE CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSTCO WHOLESALE CDR 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 COSTCO WHOLESALE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSTCO WHOLESALE CDR has no effect on the direction of GigaMedia i.e., GigaMedia and COSTCO WHOLESALE go up and down completely randomly.
Pair Corralation between GigaMedia and COSTCO WHOLESALE
Assuming the 90 days trading horizon GigaMedia is expected to generate 2.48 times more return on investment than COSTCO WHOLESALE. However, GigaMedia is 2.48 times more volatile than COSTCO WHOLESALE CDR. It trades about 0.09 of its potential returns per unit of risk. COSTCO WHOLESALE CDR is currently generating about 0.04 per unit of risk. If you would invest 140.00 in GigaMedia on October 25, 2024 and sell it today you would earn a total of 6.00 from holding GigaMedia or generate 4.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. COSTCO WHOLESALE CDR
Performance |
| Timeline |
| GigaMedia |
| COSTCO WHOLESALE CDR |
GigaMedia and COSTCO WHOLESALE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and COSTCO WHOLESALE
The main advantage of trading using opposite GigaMedia and COSTCO WHOLESALE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, COSTCO WHOLESALE 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 COSTCO WHOLESALE will offset losses from the drop in COSTCO WHOLESALE's long position.| GigaMedia vs. MAGNUM MINING EXP | GigaMedia vs. Park Hotels Resorts | GigaMedia vs. Perseus Mining Limited | GigaMedia vs. Harmony Gold Mining |
| COSTCO WHOLESALE vs. Compagnie Plastic Omnium | COSTCO WHOLESALE vs. Carnegie Clean Energy | COSTCO WHOLESALE vs. Aristocrat Leisure Limited | COSTCO WHOLESALE vs. Clean Energy Fuels |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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