Correlation Between GigaMedia and J+J SNACK
Can any of the company-specific risk be diversified away by investing in both GigaMedia and J+J SNACK 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 J+J SNACK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and JJ SNACK FOODS, you can compare the effects of market volatilities on GigaMedia and J+J SNACK 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 J+J SNACK. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and J+J SNACK.
Diversification Opportunities for GigaMedia and J+J SNACK
Very poor diversification
The 3 months correlation between GigaMedia and J+J is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and JJ SNACK FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JJ SNACK FOODS 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 J+J SNACK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JJ SNACK FOODS has no effect on the direction of GigaMedia i.e., GigaMedia and J+J SNACK go up and down completely randomly.
Pair Corralation between GigaMedia and J+J SNACK
Assuming the 90 days trading horizon GigaMedia is expected to generate 1.32 times more return on investment than J+J SNACK. However, GigaMedia is 1.32 times more volatile than JJ SNACK FOODS. It trades about 0.2 of its potential returns per unit of risk. JJ SNACK FOODS is currently generating about 0.27 per unit of risk. If you would invest 124.00 in GigaMedia on September 3, 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. JJ SNACK FOODS
Performance |
| Timeline |
| GigaMedia |
| JJ SNACK FOODS |
GigaMedia and J+J SNACK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and J+J SNACK
The main advantage of trading using opposite GigaMedia and J+J SNACK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, J+J SNACK 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 J+J SNACK will offset losses from the drop in J+J SNACK's long position.| GigaMedia vs. Autohome ADR | GigaMedia vs. Sixt Leasing SE | GigaMedia vs. Canadian Utilities Limited | GigaMedia vs. DFS Furniture PLC |
| J+J SNACK vs. GOLD ROAD RES | J+J SNACK vs. CosmoSteel Holdings Limited | J+J SNACK vs. Caltagirone SpA | J+J SNACK vs. TEXAS ROADHOUSE |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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