Correlation Between GigaMedia and THRACE PLASTICS
Can any of the company-specific risk be diversified away by investing in both GigaMedia and THRACE PLASTICS 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 THRACE PLASTICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and THRACE PLASTICS, you can compare the effects of market volatilities on GigaMedia and THRACE PLASTICS 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 THRACE PLASTICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and THRACE PLASTICS.
Diversification Opportunities for GigaMedia and THRACE PLASTICS
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GigaMedia and THRACE is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and THRACE PLASTICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THRACE PLASTICS 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 THRACE PLASTICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THRACE PLASTICS has no effect on the direction of GigaMedia i.e., GigaMedia and THRACE PLASTICS go up and down completely randomly.
Pair Corralation between GigaMedia and THRACE PLASTICS
Assuming the 90 days trading horizon GigaMedia is expected to generate 0.96 times more return on investment than THRACE PLASTICS. However, GigaMedia is 1.04 times less risky than THRACE PLASTICS. It trades about 0.04 of its potential returns per unit of risk. THRACE PLASTICS is currently generating about 0.02 per unit of risk. If you would invest 106.00 in GigaMedia on September 3, 2024 and sell it today you would earn a total of 27.00 from holding GigaMedia or generate 25.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. THRACE PLASTICS
Performance |
| Timeline |
| GigaMedia |
| THRACE PLASTICS |
GigaMedia and THRACE PLASTICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and THRACE PLASTICS
The main advantage of trading using opposite GigaMedia and THRACE PLASTICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, THRACE PLASTICS 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 THRACE PLASTICS will offset losses from the drop in THRACE PLASTICS's long position.| GigaMedia vs. Autohome ADR | GigaMedia vs. Sixt Leasing SE | GigaMedia vs. Canadian Utilities Limited | GigaMedia vs. DFS Furniture PLC |
| THRACE PLASTICS vs. TOTAL GABON | THRACE PLASTICS vs. Walgreens Boots Alliance | THRACE PLASTICS vs. Peak Resources Limited |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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