Correlation Between Lendlease and GigaMedia
Can any of the company-specific risk be diversified away by investing in both Lendlease 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 Lendlease and GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lendlease Group and GigaMedia, you can compare the effects of market volatilities on Lendlease 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 Lendlease with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendlease and GigaMedia.
Diversification Opportunities for Lendlease and GigaMedia
Very good diversification
The 3 months correlation between Lendlease and GigaMedia is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and Lendlease 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 Lendlease Group 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 Lendlease i.e., Lendlease and GigaMedia go up and down completely randomly.
Pair Corralation between Lendlease and GigaMedia
Assuming the 90 days trading horizon Lendlease Group is expected to generate 2.96 times more return on investment than GigaMedia. However, Lendlease is 2.96 times more volatile than GigaMedia. It trades about 0.02 of its potential returns per unit of risk. GigaMedia is currently generating about -0.11 per unit of risk. If you would invest 407.00 in Lendlease Group on September 13, 2024 and sell it today you would earn a total of 2.00 from holding Lendlease Group or generate 0.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lendlease Group vs. GigaMedia
Performance |
| Timeline |
| Lendlease Group |
| GigaMedia |
Lendlease and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lendlease and GigaMedia
The main advantage of trading using opposite Lendlease and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendlease 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.The idea behind Lendlease Group and GigaMedia pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| GigaMedia vs. Titan Machinery | GigaMedia vs. AUST AGRICULTURAL | GigaMedia vs. North American Construction | GigaMedia vs. ALEFARM BREWING DK 05 |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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