Correlation Between GigaMedia and G III
Can any of the company-specific risk be diversified away by investing in both GigaMedia and G III 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 G III into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and G III Apparel Group, you can compare the effects of market volatilities on GigaMedia and G III 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 G III. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and G III.
Diversification Opportunities for GigaMedia and G III
Weak diversification
The 3 months correlation between GigaMedia and GI4 is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and G III Apparel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G III Apparel 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 G III. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G III Apparel has no effect on the direction of GigaMedia i.e., GigaMedia and G III go up and down completely randomly.
Pair Corralation between GigaMedia and G III
Assuming the 90 days trading horizon GigaMedia is expected to under-perform the G III. But the stock apears to be less risky and, when comparing its historical volatility, GigaMedia is 4.81 times less risky than G III. The stock trades about -0.11 of its potential returns per unit of risk. The G III Apparel Group is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 2,880 in G III Apparel Group on September 13, 2024 and sell it today you would earn a total of 420.00 from holding G III Apparel Group or generate 14.58% 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. G III Apparel Group
Performance |
| Timeline |
| GigaMedia |
| G III Apparel |
GigaMedia and G III Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and G III
The main advantage of trading using opposite GigaMedia and G III positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, G III 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 G III will offset losses from the drop in G III's long position.| GigaMedia vs. Titan Machinery | GigaMedia vs. AUST AGRICULTURAL | GigaMedia vs. North American Construction | GigaMedia vs. ALEFARM BREWING DK 05 |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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