Correlation Between GigaMedia and PENN NATL
Can any of the company-specific risk be diversified away by investing in both GigaMedia and PENN NATL 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 PENN NATL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and PENN NATL GAMING, you can compare the effects of market volatilities on GigaMedia and PENN NATL 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 PENN NATL. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and PENN NATL.
Diversification Opportunities for GigaMedia and PENN NATL
Very poor diversification
The 3 months correlation between GigaMedia and PENN is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and PENN NATL GAMING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENN NATL GAMING 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 PENN NATL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENN NATL GAMING has no effect on the direction of GigaMedia i.e., GigaMedia and PENN NATL go up and down completely randomly.
Pair Corralation between GigaMedia and PENN NATL
Assuming the 90 days trading horizon GigaMedia is expected to generate 0.69 times more return on investment than PENN NATL. However, GigaMedia is 1.45 times less risky than PENN NATL. It trades about 0.2 of its potential returns per unit of risk. PENN NATL GAMING is currently generating about 0.09 per unit of risk. If you would invest 124.00 in GigaMedia on August 31, 2024 and sell it today you would earn a total of 9.00 from holding GigaMedia or generate 7.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. PENN NATL GAMING
Performance |
| Timeline |
| GigaMedia |
| PENN NATL GAMING |
GigaMedia and PENN NATL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and PENN NATL
The main advantage of trading using opposite GigaMedia and PENN NATL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, PENN NATL 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 PENN NATL will offset losses from the drop in PENN NATL's long position.| GigaMedia vs. JJ SNACK FOODS | GigaMedia vs. MOLSON RS BEVERAGE | GigaMedia vs. Astral Foods Limited | GigaMedia vs. Zijin Mining Group |
| PENN NATL vs. SERI INDUSTRIAL EO | PENN NATL vs. Arrow Electronics | PENN NATL vs. KIMBALL ELECTRONICS | PENN NATL vs. MCEWEN MINING INC |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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