Correlation Between GigaMedia and Treasury Wine
Can any of the company-specific risk be diversified away by investing in both GigaMedia and Treasury Wine 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 Treasury Wine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and Treasury Wine Estates, you can compare the effects of market volatilities on GigaMedia and Treasury Wine 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 Treasury Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and Treasury Wine.
Diversification Opportunities for GigaMedia and Treasury Wine
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between GigaMedia and Treasury is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and Treasury Wine Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treasury Wine Estates 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 Treasury Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treasury Wine Estates has no effect on the direction of GigaMedia i.e., GigaMedia and Treasury Wine go up and down completely randomly.
Pair Corralation between GigaMedia and Treasury Wine
Assuming the 90 days trading horizon GigaMedia is expected to generate 0.93 times more return on investment than Treasury Wine. However, GigaMedia is 1.08 times less risky than Treasury Wine. It trades about 0.2 of its potential returns per unit of risk. Treasury Wine Estates is currently generating about 0.06 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. Treasury Wine Estates
Performance |
| Timeline |
| GigaMedia |
| Treasury Wine Estates |
GigaMedia and Treasury Wine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and Treasury Wine
The main advantage of trading using opposite GigaMedia and Treasury Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, Treasury Wine 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 Treasury Wine will offset losses from the drop in Treasury Wine's long position.| GigaMedia vs. JJ SNACK FOODS | GigaMedia vs. MOLSON RS BEVERAGE | GigaMedia vs. Astral Foods Limited | GigaMedia vs. Zijin Mining Group |
| Treasury Wine vs. TELES Informationstechnologien AG | Treasury Wine vs. Nok Airlines PCL | Treasury Wine vs. SOUTHWEST AIRLINES | Treasury Wine vs. Hyrican Informationssysteme Aktiengesellschaft |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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