Correlation Between GigaMedia and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both GigaMedia and Fast Retailing 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 Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and Fast Retailing Co, you can compare the effects of market volatilities on GigaMedia and Fast Retailing 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 Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and Fast Retailing.
Diversification Opportunities for GigaMedia and Fast Retailing
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GigaMedia and Fast is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing 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 Fast Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Retailing has no effect on the direction of GigaMedia i.e., GigaMedia and Fast Retailing go up and down completely randomly.
Pair Corralation between GigaMedia and Fast Retailing
Assuming the 90 days trading horizon GigaMedia is expected to generate 1.29 times more return on investment than Fast Retailing. However, GigaMedia is 1.29 times more volatile than Fast Retailing Co. It trades about 0.2 of its potential returns per unit of risk. Fast Retailing Co is currently generating about 0.25 per unit of risk. If you would invest 124.00 in GigaMedia on September 2, 2024 and sell it today you would earn a total of 9.00 from holding GigaMedia or generate 7.26% 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. Fast Retailing Co
Performance |
| Timeline |
| GigaMedia |
| Fast Retailing |
GigaMedia and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and Fast Retailing
The main advantage of trading using opposite GigaMedia and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, Fast Retailing 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 Fast Retailing will offset losses from the drop in Fast Retailing's long position.| GigaMedia vs. Boyd Gaming | GigaMedia vs. Charter Communications | GigaMedia vs. GAMESTOP | GigaMedia vs. FRACTAL GAMING GROUP |
| Fast Retailing vs. Retail Estates NV | Fast Retailing vs. Corporate Office Properties | Fast Retailing vs. Pick n Pay | Fast Retailing vs. CITY OFFICE REIT |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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