Correlation Between GigaMedia and North American
Can any of the company-specific risk be diversified away by investing in both GigaMedia and North American 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 North American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and North American Construction, you can compare the effects of market volatilities on GigaMedia and North American 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 North American. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and North American.
Diversification Opportunities for GigaMedia and North American
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GigaMedia and North is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and North American Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North American Const 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 North American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North American Const has no effect on the direction of GigaMedia i.e., GigaMedia and North American go up and down completely randomly.
Pair Corralation between GigaMedia and North American
Assuming the 90 days trading horizon GigaMedia is expected to generate 0.62 times more return on investment than North American. However, GigaMedia is 1.62 times less risky than North American. It trades about 0.08 of its potential returns per unit of risk. North American Construction is currently generating about 0.01 per unit of risk. If you would invest 115.00 in GigaMedia on September 2, 2024 and sell it today you would earn a total of 18.00 from holding GigaMedia or generate 15.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. North American Construction
Performance |
| Timeline |
| GigaMedia |
| North American Const |
GigaMedia and North American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and North American
The main advantage of trading using opposite GigaMedia and North American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, North American 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 North American will offset losses from the drop in North American's long position.| GigaMedia vs. Boyd Gaming | GigaMedia vs. Charter Communications | GigaMedia vs. GAMESTOP | GigaMedia vs. FRACTAL GAMING GROUP |
| North American vs. Superior Plus Corp | North American vs. NMI Holdings | North American vs. Origin Agritech | North American vs. SIVERS SEMICONDUCTORS AB |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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