Correlation Between GigaMedia and TESCO PLC
Can any of the company-specific risk be diversified away by investing in both GigaMedia and TESCO PLC 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 TESCO PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and TESCO PLC LS 0633333, you can compare the effects of market volatilities on GigaMedia and TESCO PLC 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 TESCO PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and TESCO PLC.
Diversification Opportunities for GigaMedia and TESCO PLC
Very good diversification
The 3 months correlation between GigaMedia and TESCO is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and TESCO PLC LS 0633333 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TESCO PLC LS 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 TESCO PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TESCO PLC LS has no effect on the direction of GigaMedia i.e., GigaMedia and TESCO PLC go up and down completely randomly.
Pair Corralation between GigaMedia and TESCO PLC
Assuming the 90 days trading horizon GigaMedia is expected to under-perform the TESCO PLC. But the stock apears to be less risky and, when comparing its historical volatility, GigaMedia is 2.06 times less risky than TESCO PLC. The stock trades about -0.16 of its potential returns per unit of risk. The TESCO PLC LS 0633333 is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 406.00 in TESCO PLC LS 0633333 on September 15, 2024 and sell it today you would earn a total of 40.00 from holding TESCO PLC LS 0633333 or generate 9.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. TESCO PLC LS 0633333
Performance |
| Timeline |
| GigaMedia |
| TESCO PLC LS |
GigaMedia and TESCO PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and TESCO PLC
The main advantage of trading using opposite GigaMedia and TESCO PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, TESCO PLC 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 TESCO PLC will offset losses from the drop in TESCO PLC's long position.| GigaMedia vs. Gladstone Investment | GigaMedia vs. PennyMac Mortgage Investment | GigaMedia vs. Charoen Pokphand Foods | GigaMedia vs. INDOFOOD AGRI RES |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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