Correlation Between GigaMedia and Penn National
Can any of the company-specific risk be diversified away by investing in both GigaMedia and Penn National 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 National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and Penn National Gaming, you can compare the effects of market volatilities on GigaMedia and Penn National 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 National. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and Penn National.
Diversification Opportunities for GigaMedia and Penn National
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GigaMedia and Penn is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and Penn National Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penn National 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 National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penn National Gaming has no effect on the direction of GigaMedia i.e., GigaMedia and Penn National go up and down completely randomly.
Pair Corralation between GigaMedia and Penn National
Assuming the 90 days trading horizon GigaMedia is expected to generate 0.45 times more return on investment than Penn National. However, GigaMedia is 2.2 times less risky than Penn National. It trades about 0.04 of its potential returns per unit of risk. Penn National Gaming is currently generating about 0.0 per unit of risk. If you would invest 108.00 in GigaMedia on August 31, 2024 and sell it today you would earn a total of 25.00 from holding GigaMedia or generate 23.15% 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 National Gaming
Performance |
| Timeline |
| GigaMedia |
| Penn National Gaming |
GigaMedia and Penn National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and Penn National
The main advantage of trading using opposite GigaMedia and Penn National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, Penn National 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 National will offset losses from the drop in Penn National's long position.| GigaMedia vs. JJ SNACK FOODS | GigaMedia vs. MOLSON RS BEVERAGE | GigaMedia vs. Astral Foods Limited | GigaMedia vs. Zijin Mining Group |
| Penn National vs. Superior Plus Corp | Penn National vs. NMI Holdings | Penn National vs. Origin Agritech | Penn National 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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