Correlation Between NORTHEAST UTILITIES and GigaMedia
Can any of the company-specific risk be diversified away by investing in both NORTHEAST UTILITIES 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 NORTHEAST UTILITIES and GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NORTHEAST UTILITIES and GigaMedia, you can compare the effects of market volatilities on NORTHEAST UTILITIES 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 NORTHEAST UTILITIES with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORTHEAST UTILITIES and GigaMedia.
Diversification Opportunities for NORTHEAST UTILITIES and GigaMedia
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NORTHEAST and GigaMedia is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding NORTHEAST UTILITIES and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and NORTHEAST UTILITIES 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 NORTHEAST UTILITIES 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 NORTHEAST UTILITIES i.e., NORTHEAST UTILITIES and GigaMedia go up and down completely randomly.
Pair Corralation between NORTHEAST UTILITIES and GigaMedia
Assuming the 90 days trading horizon NORTHEAST UTILITIES is expected to generate 2.78 times less return on investment than GigaMedia. But when comparing it to its historical volatility, NORTHEAST UTILITIES is 1.61 times less risky than GigaMedia. It trades about 0.12 of its potential returns per unit of risk. GigaMedia is currently generating about 0.2 of returns per unit of risk over similar time horizon. 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NORTHEAST UTILITIES vs. GigaMedia
Performance |
| Timeline |
| NORTHEAST UTILITIES |
| GigaMedia |
NORTHEAST UTILITIES and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORTHEAST UTILITIES and GigaMedia
The main advantage of trading using opposite NORTHEAST UTILITIES and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORTHEAST UTILITIES 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.| NORTHEAST UTILITIES vs. Playa Hotels Resorts | NORTHEAST UTILITIES vs. American Airlines Group | NORTHEAST UTILITIES vs. PLAYSTUDIOS A DL 0001 | NORTHEAST UTILITIES vs. Beijing Media |
| 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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