Correlation Between GigaMedia and SUMITOMO CORP
Can any of the company-specific risk be diversified away by investing in both GigaMedia and SUMITOMO CORP 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 SUMITOMO CORP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and SUMITOMO P SP, you can compare the effects of market volatilities on GigaMedia and SUMITOMO CORP 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 SUMITOMO CORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and SUMITOMO CORP.
Diversification Opportunities for GigaMedia and SUMITOMO CORP
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between GigaMedia and SUMITOMO is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and SUMITOMO P SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUMITOMO P SP 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 SUMITOMO CORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUMITOMO P SP has no effect on the direction of GigaMedia i.e., GigaMedia and SUMITOMO CORP go up and down completely randomly.
Pair Corralation between GigaMedia and SUMITOMO CORP
Assuming the 90 days trading horizon GigaMedia is expected to under-perform the SUMITOMO CORP. But the stock apears to be less risky and, when comparing its historical volatility, GigaMedia is 2.08 times less risky than SUMITOMO CORP. The stock trades about -0.21 of its potential returns per unit of risk. The SUMITOMO P SP is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,020 in SUMITOMO P SP on November 28, 2024 and sell it today you would earn a total of 120.00 from holding SUMITOMO P SP or generate 5.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. SUMITOMO P SP
Performance |
| Timeline |
| GigaMedia |
| SUMITOMO P SP |
GigaMedia and SUMITOMO CORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and SUMITOMO CORP
The main advantage of trading using opposite GigaMedia and SUMITOMO CORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, SUMITOMO CORP 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 SUMITOMO CORP will offset losses from the drop in SUMITOMO CORP's long position.| GigaMedia vs. Prosiebensat 1 Media | GigaMedia vs. Southwest Airlines Co | GigaMedia vs. ANTA Sports Products | GigaMedia vs. EITZEN CHEMICALS |
| SUMITOMO CORP vs. COLUMBIA SPORTSWEAR | SUMITOMO CORP vs. GUILD ESPORTS PLC | SUMITOMO CORP vs. ON Semiconductor | SUMITOMO CORP vs. Fukuyama Transporting Co |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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