Correlation Between Ming Le and GigaMedia
Can any of the company-specific risk be diversified away by investing in both Ming Le 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 Ming Le and GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ming Le Sports and GigaMedia, you can compare the effects of market volatilities on Ming Le 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 Ming Le with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ming Le and GigaMedia.
Diversification Opportunities for Ming Le and GigaMedia
Very weak diversification
The 3 months correlation between Ming and GigaMedia is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ming Le Sports and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and Ming Le 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 Ming Le Sports 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 Ming Le i.e., Ming Le and GigaMedia go up and down completely randomly.
Pair Corralation between Ming Le and GigaMedia
Assuming the 90 days trading horizon Ming Le Sports is expected to generate 3.22 times more return on investment than GigaMedia. However, Ming Le is 3.22 times more volatile than GigaMedia. It trades about 0.24 of its potential returns per unit of risk. GigaMedia is currently generating about 0.19 per unit of risk. If you would invest 100.00 in Ming Le Sports on August 28, 2024 and sell it today you would earn a total of 39.00 from holding Ming Le Sports or generate 39.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ming Le Sports vs. GigaMedia
Performance |
| Timeline |
| Ming Le Sports |
| GigaMedia |
Ming Le and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ming Le and GigaMedia
The main advantage of trading using opposite Ming Le and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ming Le 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 Ming Le Sports 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. EAT WELL INVESTMENT | GigaMedia vs. GEAR4MUSIC LS 10 | GigaMedia vs. PACIFIC ONLINE | GigaMedia vs. BOS BETTER ONLINE |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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