Correlation Between GigaMedia and Grizzly Discoveries
Can any of the company-specific risk be diversified away by investing in both GigaMedia and Grizzly Discoveries 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 Grizzly Discoveries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and Grizzly Discoveries, you can compare the effects of market volatilities on GigaMedia and Grizzly Discoveries 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 Grizzly Discoveries. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and Grizzly Discoveries.
Diversification Opportunities for GigaMedia and Grizzly Discoveries
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GigaMedia and Grizzly is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and Grizzly Discoveries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grizzly Discoveries 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 Grizzly Discoveries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grizzly Discoveries has no effect on the direction of GigaMedia i.e., GigaMedia and Grizzly Discoveries go up and down completely randomly.
Pair Corralation between GigaMedia and Grizzly Discoveries
Assuming the 90 days trading horizon GigaMedia is expected to generate 214.56 times less return on investment than Grizzly Discoveries. But when comparing it to its historical volatility, GigaMedia is 40.74 times less risky than Grizzly Discoveries. It trades about 0.03 of its potential returns per unit of risk. Grizzly Discoveries is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 4.10 in Grizzly Discoveries on September 12, 2024 and sell it today you would lose (3.90) from holding Grizzly Discoveries or give up 95.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. Grizzly Discoveries
Performance |
| Timeline |
| GigaMedia |
| Grizzly Discoveries |
GigaMedia and Grizzly Discoveries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and Grizzly Discoveries
The main advantage of trading using opposite GigaMedia and Grizzly Discoveries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, Grizzly Discoveries 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 Grizzly Discoveries will offset losses from the drop in Grizzly Discoveries' long position.The idea behind GigaMedia and Grizzly Discoveries 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.| Grizzly Discoveries vs. PARKEN Sport Entertainment | Grizzly Discoveries vs. CVR Medical Corp | Grizzly Discoveries vs. Sixt Leasing SE | Grizzly Discoveries vs. GigaMedia |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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