Correlation Between GigaMedia and Nike
Can any of the company-specific risk be diversified away by investing in both GigaMedia and Nike 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 Nike into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and Nike Inc, you can compare the effects of market volatilities on GigaMedia and Nike 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 Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and Nike.
Diversification Opportunities for GigaMedia and Nike
Very good diversification
The 3 months correlation between GigaMedia and Nike is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc 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 Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of GigaMedia i.e., GigaMedia and Nike go up and down completely randomly.
Pair Corralation between GigaMedia and Nike
Assuming the 90 days trading horizon GigaMedia is expected to generate 3.02 times more return on investment than Nike. However, GigaMedia is 3.02 times more volatile than Nike Inc. It trades about 0.28 of its potential returns per unit of risk. Nike Inc is currently generating about -0.33 per unit of risk. If you would invest 134.00 in GigaMedia on October 13, 2024 and sell it today you would earn a total of 21.00 from holding GigaMedia or generate 15.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
GigaMedia vs. Nike Inc
Performance |
| Timeline |
| GigaMedia |
| Nike Inc |
GigaMedia and Nike Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and Nike
The main advantage of trading using opposite GigaMedia and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, Nike 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 Nike will offset losses from the drop in Nike's long position.| GigaMedia vs. Carnegie Clean Energy | GigaMedia vs. BOS BETTER ONLINE | GigaMedia vs. CODERE ONLINE LUX | GigaMedia vs. CarsalesCom |
| Nike vs. OPERA SOFTWARE | Nike vs. AXWAY SOFTWARE EO | Nike vs. GigaMedia | Nike vs. Magic Software Enterprises |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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