Correlation Between GigaMedia and GAMESTOP
Can any of the company-specific risk be diversified away by investing in both GigaMedia and GAMESTOP 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 GAMESTOP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and GAMESTOP, you can compare the effects of market volatilities on GigaMedia and GAMESTOP 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 GAMESTOP. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and GAMESTOP.
Diversification Opportunities for GigaMedia and GAMESTOP
Very poor diversification
The 3 months correlation between GigaMedia and GAMESTOP is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and GAMESTOP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMESTOP 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 GAMESTOP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMESTOP has no effect on the direction of GigaMedia i.e., GigaMedia and GAMESTOP go up and down completely randomly.
Pair Corralation between GigaMedia and GAMESTOP
Assuming the 90 days trading horizon GigaMedia is expected to generate 14.52 times less return on investment than GAMESTOP. But when comparing it to its historical volatility, GigaMedia is 6.01 times less risky than GAMESTOP. It trades about 0.02 of its potential returns per unit of risk. GAMESTOP is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,293 in GAMESTOP on August 27, 2024 and sell it today you would earn a total of 342.00 from holding GAMESTOP or generate 14.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. GAMESTOP
Performance |
| Timeline |
| GigaMedia |
| GAMESTOP |
GigaMedia and GAMESTOP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and GAMESTOP
The main advantage of trading using opposite GigaMedia and GAMESTOP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, GAMESTOP 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 GAMESTOP will offset losses from the drop in GAMESTOP's long position.| GigaMedia vs. EAT WELL INVESTMENT | GigaMedia vs. GEAR4MUSIC LS 10 | GigaMedia vs. PACIFIC ONLINE | GigaMedia vs. BOS BETTER ONLINE |
| GAMESTOP vs. DiamondRock Hospitality | GAMESTOP vs. GUARDANT HEALTH CL | GAMESTOP vs. ASPEN TECHINC DL | GAMESTOP vs. FEMALE HEALTH |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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