Correlation Between GigaMedia and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both GigaMedia and Nordic Semiconductor 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 Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and Nordic Semiconductor ASA, you can compare the effects of market volatilities on GigaMedia and Nordic Semiconductor 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 Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and Nordic Semiconductor.
Diversification Opportunities for GigaMedia and Nordic Semiconductor
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GigaMedia and Nordic is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and Nordic Semiconductor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Semiconductor ASA 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 Nordic Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Semiconductor ASA has no effect on the direction of GigaMedia i.e., GigaMedia and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between GigaMedia and Nordic Semiconductor
Assuming the 90 days trading horizon GigaMedia is expected to generate 1.09 times more return on investment than Nordic Semiconductor. However, GigaMedia is 1.09 times more volatile than Nordic Semiconductor ASA. It trades about 0.26 of its potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about -0.16 per unit of risk. If you would invest 120.00 in GigaMedia on August 25, 2024 and sell it today you would earn a total of 16.00 from holding GigaMedia or generate 13.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. Nordic Semiconductor ASA
Performance |
| Timeline |
| GigaMedia |
| Nordic Semiconductor ASA |
GigaMedia and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and Nordic Semiconductor
The main advantage of trading using opposite GigaMedia and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, Nordic Semiconductor 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 Nordic Semiconductor will offset losses from the drop in Nordic Semiconductor's long position.| GigaMedia vs. NXP Semiconductors NV | GigaMedia vs. Virtus Investment Partners | GigaMedia vs. Taiwan Semiconductor Manufacturing | GigaMedia vs. ECHO INVESTMENT ZY |
| Nordic Semiconductor vs. Flutter Entertainment PLC | Nordic Semiconductor vs. PARKEN Sport Entertainment | Nordic Semiconductor vs. Pentair plc | Nordic Semiconductor vs. DELTA AIR LINES |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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