Correlation Between Nufarm and GigaMedia
Can any of the company-specific risk be diversified away by investing in both Nufarm 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 Nufarm and GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nufarm Limited and GigaMedia, you can compare the effects of market volatilities on Nufarm 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 Nufarm with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nufarm and GigaMedia.
Diversification Opportunities for Nufarm and GigaMedia
Very weak diversification
The 3 months correlation between Nufarm and GigaMedia is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Nufarm Limited and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and Nufarm 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 Nufarm Limited 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 Nufarm i.e., Nufarm and GigaMedia go up and down completely randomly.
Pair Corralation between Nufarm and GigaMedia
Assuming the 90 days horizon Nufarm is expected to generate 14.54 times less return on investment than GigaMedia. In addition to that, Nufarm is 1.33 times more volatile than GigaMedia. It trades about 0.01 of its total potential returns per unit of risk. GigaMedia is currently generating about 0.2 per unit of volatility. If you would invest 124.00 in GigaMedia on September 2, 2024 and sell it today you would earn a total of 9.00 from holding GigaMedia or generate 7.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nufarm Limited vs. GigaMedia
Performance |
| Timeline |
| Nufarm Limited |
| GigaMedia |
Nufarm and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nufarm and GigaMedia
The main advantage of trading using opposite Nufarm and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nufarm 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 Nufarm Limited 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. Boyd Gaming | GigaMedia vs. Charter Communications | GigaMedia vs. GAMESTOP | GigaMedia vs. FRACTAL GAMING GROUP |
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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