Correlation Between GigaMedia and Mitsui Chemicals
Can any of the company-specific risk be diversified away by investing in both GigaMedia and Mitsui Chemicals 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 Mitsui Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and Mitsui Chemicals, you can compare the effects of market volatilities on GigaMedia and Mitsui Chemicals 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 Mitsui Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and Mitsui Chemicals.
Diversification Opportunities for GigaMedia and Mitsui Chemicals
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GigaMedia and Mitsui is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and Mitsui Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsui Chemicals 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 Mitsui Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsui Chemicals has no effect on the direction of GigaMedia i.e., GigaMedia and Mitsui Chemicals go up and down completely randomly.
Pair Corralation between GigaMedia and Mitsui Chemicals
Assuming the 90 days trading horizon GigaMedia is expected to under-perform the Mitsui Chemicals. But the stock apears to be less risky and, when comparing its historical volatility, GigaMedia is 1.07 times less risky than Mitsui Chemicals. The stock trades about -0.48 of its potential returns per unit of risk. The Mitsui Chemicals is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,020 in Mitsui Chemicals on November 8, 2024 and sell it today you would earn a total of 40.00 from holding Mitsui Chemicals or generate 1.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. Mitsui Chemicals
Performance |
| Timeline |
| GigaMedia |
| Mitsui Chemicals |
GigaMedia and Mitsui Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and Mitsui Chemicals
The main advantage of trading using opposite GigaMedia and Mitsui Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, Mitsui Chemicals 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 Mitsui Chemicals will offset losses from the drop in Mitsui Chemicals' long position.| GigaMedia vs. New Residential Investment | GigaMedia vs. Fast Retailing Co | GigaMedia vs. CARSALESCOM | GigaMedia vs. SIDETRADE EO 1 |
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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