Correlation Between GigaMedia and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both GigaMedia and Monster Beverage 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 Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and Monster Beverage Corp, you can compare the effects of market volatilities on GigaMedia and Monster Beverage 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 Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and Monster Beverage.
Diversification Opportunities for GigaMedia and Monster Beverage
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GigaMedia and Monster is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and Monster Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monster Beverage Corp 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 Monster Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monster Beverage Corp has no effect on the direction of GigaMedia i.e., GigaMedia and Monster Beverage go up and down completely randomly.
Pair Corralation between GigaMedia and Monster Beverage
Assuming the 90 days trading horizon GigaMedia is expected to generate 1.14 times more return on investment than Monster Beverage. However, GigaMedia is 1.14 times more volatile than Monster Beverage Corp. It trades about 0.19 of its potential returns per unit of risk. Monster Beverage Corp is currently generating about 0.18 per unit of risk. If you would invest 122.00 in GigaMedia on August 28, 2024 and sell it today you would earn a total of 11.00 from holding GigaMedia or generate 9.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. Monster Beverage Corp
Performance |
| Timeline |
| GigaMedia |
| Monster Beverage Corp |
GigaMedia and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and Monster Beverage
The main advantage of trading using opposite GigaMedia and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, Monster Beverage 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 Monster Beverage will offset losses from the drop in Monster Beverage's long position.| GigaMedia vs. EAT WELL INVESTMENT | GigaMedia vs. GEAR4MUSIC LS 10 | GigaMedia vs. PACIFIC ONLINE | GigaMedia vs. BOS BETTER ONLINE |
| Monster Beverage vs. Apple Inc | Monster Beverage vs. Apple Inc | Monster Beverage vs. Apple Inc | Monster Beverage vs. Microsoft |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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