Correlation Between GOODYEAR T and GigaMedia
Can any of the company-specific risk be diversified away by investing in both GOODYEAR T and GigaMedia 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 GOODYEAR T and GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GOODYEAR T RUBBER and GigaMedia, you can compare the effects of market volatilities on GOODYEAR T and GigaMedia 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 GOODYEAR T with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOODYEAR T and GigaMedia.
Diversification Opportunities for GOODYEAR T and GigaMedia
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GOODYEAR and GigaMedia is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding GOODYEAR T RUBBER and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and GOODYEAR T 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 GOODYEAR T RUBBER are associated (or correlated) with GigaMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GigaMedia has no effect on the direction of GOODYEAR T i.e., GOODYEAR T and GigaMedia go up and down completely randomly.
Pair Corralation between GOODYEAR T and GigaMedia
Assuming the 90 days trading horizon GOODYEAR T RUBBER is expected to under-perform the GigaMedia. In addition to that, GOODYEAR T is 1.95 times more volatile than GigaMedia. It trades about -0.01 of its total potential returns per unit of risk. GigaMedia is currently generating about 0.09 per unit of volatility. If you would invest 114.00 in GigaMedia on September 3, 2024 and sell it today you would earn a total of 19.00 from holding GigaMedia or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GOODYEAR T RUBBER vs. GigaMedia
Performance |
| Timeline |
| GOODYEAR T RUBBER |
| GigaMedia |
GOODYEAR T and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GOODYEAR T and GigaMedia
The main advantage of trading using opposite GOODYEAR T and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOODYEAR T position performs unexpectedly, GigaMedia 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 GigaMedia will offset losses from the drop in GigaMedia's long position.| GOODYEAR T vs. TOTAL GABON | GOODYEAR T vs. Walgreens Boots Alliance | GOODYEAR T vs. Peak Resources Limited |
| GigaMedia vs. Autohome ADR | GigaMedia vs. Sixt Leasing SE | GigaMedia vs. Canadian Utilities Limited | GigaMedia vs. DFS Furniture PLC |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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