Correlation Between GigaMedia and Century Aluminum
Can any of the company-specific risk be diversified away by investing in both GigaMedia and Century Aluminum 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 Century Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and Century Aluminum, you can compare the effects of market volatilities on GigaMedia and Century Aluminum 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 Century Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and Century Aluminum.
Diversification Opportunities for GigaMedia and Century Aluminum
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GigaMedia and Century is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and Century Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Aluminum 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 Century Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Aluminum has no effect on the direction of GigaMedia i.e., GigaMedia and Century Aluminum go up and down completely randomly.
Pair Corralation between GigaMedia and Century Aluminum
Assuming the 90 days trading horizon GigaMedia is expected to generate 1.4 times less return on investment than Century Aluminum. But when comparing it to its historical volatility, GigaMedia is 2.39 times less risky than Century Aluminum. It trades about 0.06 of its potential returns per unit of risk. Century Aluminum is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,544 in Century Aluminum on November 7, 2024 and sell it today you would earn a total of 201.00 from holding Century Aluminum or generate 13.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. Century Aluminum
Performance |
| Timeline |
| GigaMedia |
| Century Aluminum |
GigaMedia and Century Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and Century Aluminum
The main advantage of trading using opposite GigaMedia and Century Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, Century Aluminum 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 Century Aluminum will offset losses from the drop in Century Aluminum's long position.| GigaMedia vs. T Mobile | GigaMedia vs. COMMERCIAL VEHICLE | GigaMedia vs. Verizon Communications | GigaMedia vs. Tower One Wireless |
| Century Aluminum vs. Summit Hotel Properties | Century Aluminum vs. Acadia Healthcare | Century Aluminum vs. RCI Hospitality Holdings | Century Aluminum vs. US Physical Therapy |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |