Correlation Between GigaMedia and Lendlease
Can any of the company-specific risk be diversified away by investing in both GigaMedia and Lendlease 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 Lendlease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and Lendlease Group, you can compare the effects of market volatilities on GigaMedia and Lendlease 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 Lendlease. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and Lendlease.
Diversification Opportunities for GigaMedia and Lendlease
Very good diversification
The 3 months correlation between GigaMedia and Lendlease is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and Lendlease Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendlease Group 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 Lendlease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lendlease Group has no effect on the direction of GigaMedia i.e., GigaMedia and Lendlease go up and down completely randomly.
Pair Corralation between GigaMedia and Lendlease
Assuming the 90 days trading horizon GigaMedia is expected to generate 1.33 times more return on investment than Lendlease. However, GigaMedia is 1.33 times more volatile than Lendlease Group. It trades about 0.14 of its potential returns per unit of risk. Lendlease Group is currently generating about 0.09 per unit of risk. If you would invest 114.00 in GigaMedia on September 3, 2024 and sell it today you would earn a total of 19.00 from holding GigaMedia or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. Lendlease Group
Performance |
| Timeline |
| GigaMedia |
| Lendlease Group |
GigaMedia and Lendlease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and Lendlease
The main advantage of trading using opposite GigaMedia and Lendlease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, Lendlease 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 Lendlease will offset losses from the drop in Lendlease's long position.| GigaMedia vs. Autohome ADR | GigaMedia vs. Sixt Leasing SE | GigaMedia vs. Canadian Utilities Limited | GigaMedia vs. DFS Furniture PLC |
| Lendlease vs. KB HOME | Lendlease vs. Flutter Entertainment PLC | Lendlease vs. GigaMedia | Lendlease vs. PT Global Mediacom |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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