Correlation Between GigaMedia and Ribbon Communications
Can any of the company-specific risk be diversified away by investing in both GigaMedia and Ribbon Communications 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 Ribbon Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and Ribbon Communications, you can compare the effects of market volatilities on GigaMedia and Ribbon Communications 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 Ribbon Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and Ribbon Communications.
Diversification Opportunities for GigaMedia and Ribbon Communications
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between GigaMedia and Ribbon is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and Ribbon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ribbon Communications 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 Ribbon Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ribbon Communications has no effect on the direction of GigaMedia i.e., GigaMedia and Ribbon Communications go up and down completely randomly.
Pair Corralation between GigaMedia and Ribbon Communications
Assuming the 90 days trading horizon GigaMedia is expected to generate 2.33 times less return on investment than Ribbon Communications. But when comparing it to its historical volatility, GigaMedia is 1.46 times less risky than Ribbon Communications. It trades about 0.13 of its potential returns per unit of risk. Ribbon Communications is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 262.00 in Ribbon Communications on September 12, 2024 and sell it today you would earn a total of 106.00 from holding Ribbon Communications or generate 40.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. Ribbon Communications
Performance |
| Timeline |
| GigaMedia |
| Ribbon Communications |
GigaMedia and Ribbon Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and Ribbon Communications
The main advantage of trading using opposite GigaMedia and Ribbon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, Ribbon Communications 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 Ribbon Communications will offset losses from the drop in Ribbon Communications' long position.| GigaMedia vs. Titan Machinery | GigaMedia vs. AUST AGRICULTURAL | GigaMedia vs. North American Construction | GigaMedia vs. ALEFARM BREWING DK 05 |
| Ribbon Communications vs. Superior Plus Corp | Ribbon Communications vs. SIVERS SEMICONDUCTORS AB | Ribbon Communications vs. Norsk Hydro ASA | Ribbon Communications vs. Reliance Steel Aluminum |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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