Correlation Between GigaMedia and China Resources
Can any of the company-specific risk be diversified away by investing in both GigaMedia and China Resources 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 China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and China Resources Gas, you can compare the effects of market volatilities on GigaMedia and China Resources 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 China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and China Resources.
Diversification Opportunities for GigaMedia and China Resources
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GigaMedia and China is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and China Resources Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Gas 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 China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Gas has no effect on the direction of GigaMedia i.e., GigaMedia and China Resources go up and down completely randomly.
Pair Corralation between GigaMedia and China Resources
Assuming the 90 days trading horizon GigaMedia is expected to generate 1.7 times more return on investment than China Resources. However, GigaMedia is 1.7 times more volatile than China Resources Gas. It trades about 0.02 of its potential returns per unit of risk. China Resources Gas is currently generating about -0.39 per unit of risk. If you would invest 140.00 in GigaMedia on November 2, 2024 and sell it today you would earn a total of 1.00 from holding GigaMedia or generate 0.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. China Resources Gas
Performance |
| Timeline |
| GigaMedia |
| China Resources Gas |
GigaMedia and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and China Resources
The main advantage of trading using opposite GigaMedia and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, China Resources 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 China Resources will offset losses from the drop in China Resources' long position.| GigaMedia vs. Fukuyama Transporting Co | GigaMedia vs. Gaztransport Technigaz SA | GigaMedia vs. BII Railway Transportation | GigaMedia vs. Semiconductor Manufacturing International |
| China Resources vs. High Liner Foods | China Resources vs. PURE FOODS TASMANIA | China Resources vs. Maple Leaf Foods | China Resources vs. PATTIES FOODS |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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