Correlation Between GigaMedia and EnviTec Biogas
Can any of the company-specific risk be diversified away by investing in both GigaMedia and EnviTec Biogas 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 EnviTec Biogas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and EnviTec Biogas AG, you can compare the effects of market volatilities on GigaMedia and EnviTec Biogas 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 EnviTec Biogas. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and EnviTec Biogas.
Diversification Opportunities for GigaMedia and EnviTec Biogas
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GigaMedia and EnviTec is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and EnviTec Biogas AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EnviTec Biogas AG 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 EnviTec Biogas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EnviTec Biogas AG has no effect on the direction of GigaMedia i.e., GigaMedia and EnviTec Biogas go up and down completely randomly.
Pair Corralation between GigaMedia and EnviTec Biogas
Assuming the 90 days trading horizon GigaMedia is expected to generate 1.89 times more return on investment than EnviTec Biogas. However, GigaMedia is 1.89 times more volatile than EnviTec Biogas AG. It trades about 0.02 of its potential returns per unit of risk. EnviTec Biogas AG is currently generating about -0.04 per unit of risk. If you would invest 140.00 in GigaMedia on November 3, 2024 and sell it today you would earn a total of 1.00 from holding GigaMedia or generate 0.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. EnviTec Biogas AG
Performance |
| Timeline |
| GigaMedia |
| EnviTec Biogas AG |
GigaMedia and EnviTec Biogas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and EnviTec Biogas
The main advantage of trading using opposite GigaMedia and EnviTec Biogas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, EnviTec Biogas 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 EnviTec Biogas will offset losses from the drop in EnviTec Biogas' long position.| GigaMedia vs. Autohome ADR | GigaMedia vs. Semiconductor Manufacturing International | GigaMedia vs. The Home Depot | GigaMedia vs. DFS Furniture PLC |
| EnviTec Biogas vs. X FAB Silicon Foundries | EnviTec Biogas vs. Yanzhou Coal Mining | EnviTec Biogas vs. Mitsui Chemicals | EnviTec Biogas vs. AIR PRODCHEMICALS |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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