Correlation Between GigaMedia and PARKEN Sport
Can any of the company-specific risk be diversified away by investing in both GigaMedia and PARKEN Sport 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 PARKEN Sport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and PARKEN Sport Entertainment, you can compare the effects of market volatilities on GigaMedia and PARKEN Sport 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 PARKEN Sport. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and PARKEN Sport.
Diversification Opportunities for GigaMedia and PARKEN Sport
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GigaMedia and PARKEN is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and PARKEN Sport Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PARKEN Sport Enterta 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 PARKEN Sport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PARKEN Sport Enterta has no effect on the direction of GigaMedia i.e., GigaMedia and PARKEN Sport go up and down completely randomly.
Pair Corralation between GigaMedia and PARKEN Sport
Assuming the 90 days trading horizon GigaMedia is expected to generate 10.65 times less return on investment than PARKEN Sport. But when comparing it to its historical volatility, GigaMedia is 4.97 times less risky than PARKEN Sport. It trades about 0.03 of its potential returns per unit of risk. PARKEN Sport Entertainment is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 591.00 in PARKEN Sport Entertainment on September 12, 2024 and sell it today you would earn a total of 1,094 from holding PARKEN Sport Entertainment or generate 185.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. PARKEN Sport Entertainment
Performance |
| Timeline |
| GigaMedia |
| PARKEN Sport Enterta |
GigaMedia and PARKEN Sport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and PARKEN Sport
The main advantage of trading using opposite GigaMedia and PARKEN Sport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, PARKEN Sport 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 PARKEN Sport will offset losses from the drop in PARKEN Sport's long position.The idea behind GigaMedia and PARKEN Sport Entertainment 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.| PARKEN Sport vs. The Walt Disney | PARKEN Sport vs. Charter Communications | PARKEN Sport vs. Warner Music Group | PARKEN Sport vs. Superior Plus Corp |
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 CEOs Directory module to screen CEOs from public companies around the world.
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