Correlation Between GigaMedia and GBS Software
Can any of the company-specific risk be diversified away by investing in both GigaMedia and GBS Software 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 GBS Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and GBS Software AG, you can compare the effects of market volatilities on GigaMedia and GBS Software 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 GBS Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and GBS Software.
Diversification Opportunities for GigaMedia and GBS Software
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GigaMedia and GBS is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and GBS Software AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GBS Software AG 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 GBS Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GBS Software AG has no effect on the direction of GigaMedia i.e., GigaMedia and GBS Software go up and down completely randomly.
Pair Corralation between GigaMedia and GBS Software
Assuming the 90 days trading horizon GigaMedia is expected to generate 3.81 times less return on investment than GBS Software. In addition to that, GigaMedia is 1.24 times more volatile than GBS Software AG. It trades about 0.09 of its total potential returns per unit of risk. GBS Software AG is currently generating about 0.4 per unit of volatility. If you would invest 262.00 in GBS Software AG on October 26, 2024 and sell it today you would earn a total of 50.00 from holding GBS Software AG or generate 19.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.74% |
| Values | Daily Returns |
GigaMedia vs. GBS Software AG
Performance |
| Timeline |
| GigaMedia |
| GBS Software AG |
GigaMedia and GBS Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and GBS Software
The main advantage of trading using opposite GigaMedia and GBS Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, GBS Software 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 GBS Software will offset losses from the drop in GBS Software's long position.| GigaMedia vs. MOLSON RS BEVERAGE | GigaMedia vs. Suntory Beverage Food | GigaMedia vs. USWE SPORTS AB | GigaMedia vs. SAN MIGUEL BREWERY |
| GBS Software vs. INSURANCE AUST GRP | GBS Software vs. IMPERIAL TOBACCO | GBS Software vs. Insurance Australia Group | GBS Software vs. Goosehead Insurance |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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