Correlation Between GigaMedia and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both GigaMedia and BJs Restaurants 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 BJs Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and BJs Restaurants, you can compare the effects of market volatilities on GigaMedia and BJs Restaurants 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 BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and BJs Restaurants.
Diversification Opportunities for GigaMedia and BJs Restaurants
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GigaMedia and BJs is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants 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 BJs Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Restaurants has no effect on the direction of GigaMedia i.e., GigaMedia and BJs Restaurants go up and down completely randomly.
Pair Corralation between GigaMedia and BJs Restaurants
Assuming the 90 days trading horizon GigaMedia is expected to generate 0.53 times more return on investment than BJs Restaurants. However, GigaMedia is 1.89 times less risky than BJs Restaurants. It trades about 0.08 of its potential returns per unit of risk. BJs Restaurants is currently generating about 0.03 per unit of risk. If you would invest 115.00 in GigaMedia on September 5, 2024 and sell it today you would earn a total of 18.00 from holding GigaMedia or generate 15.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaMedia vs. BJs Restaurants
Performance |
| Timeline |
| GigaMedia |
| BJs Restaurants |
GigaMedia and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaMedia and BJs Restaurants
The main advantage of trading using opposite GigaMedia and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, BJs Restaurants 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 BJs Restaurants will offset losses from the drop in BJs Restaurants' long position.| GigaMedia vs. VARIOUS EATERIES LS | GigaMedia vs. ETFS Coffee ETC | GigaMedia vs. North American Construction | GigaMedia vs. KINGBOARD CHEMICAL |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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