Correlation Between GigaMedia and Ross Stores
Can any of the company-specific risk be diversified away by investing in both GigaMedia and Ross Stores 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 Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and Ross Stores, you can compare the effects of market volatilities on GigaMedia and Ross Stores 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 Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and Ross Stores.
Diversification Opportunities for GigaMedia and Ross Stores
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GigaMedia and Ross is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores 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 Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of GigaMedia i.e., GigaMedia and Ross Stores go up and down completely randomly.
Pair Corralation between GigaMedia and Ross Stores
Assuming the 90 days trading horizon GigaMedia is expected to generate 2.19 times more return on investment than Ross Stores. However, GigaMedia is 2.19 times more volatile than Ross Stores. It trades about 0.27 of its potential returns per unit of risk. Ross Stores is currently generating about 0.04 per unit of risk. If you would invest 133.00 in GigaMedia on October 11, 2024 and sell it today you would earn a total of 21.00 from holding GigaMedia or generate 15.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. Ross Stores
Performance |
| Timeline |
| GigaMedia |
| Ross Stores |
GigaMedia and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and Ross Stores
The main advantage of trading using opposite GigaMedia and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, Ross Stores 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 Ross Stores will offset losses from the drop in Ross Stores' long position.| GigaMedia vs. FIH MOBILE | GigaMedia vs. BioNTech SE | GigaMedia vs. Geely Automobile Holdings | GigaMedia vs. Shenandoah Telecommunications |
| Ross Stores vs. MOVIE GAMES SA | Ross Stores vs. GigaMedia | Ross Stores vs. PLAYMATES TOYS | Ross Stores vs. Penn National Gaming |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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