Correlation Between PENN NATL and GigaMedia
Can any of the company-specific risk be diversified away by investing in both PENN NATL 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 PENN NATL and GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PENN NATL GAMING and GigaMedia, you can compare the effects of market volatilities on PENN NATL 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 PENN NATL with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN NATL and GigaMedia.
Diversification Opportunities for PENN NATL and GigaMedia
Weak diversification
The 3 months correlation between PENN and GigaMedia is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding PENN NATL GAMING and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and PENN NATL 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 PENN NATL GAMING 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 PENN NATL i.e., PENN NATL and GigaMedia go up and down completely randomly.
Pair Corralation between PENN NATL and GigaMedia
Assuming the 90 days trading horizon PENN NATL GAMING is expected to generate 0.93 times more return on investment than GigaMedia. However, PENN NATL GAMING is 1.08 times less risky than GigaMedia. It trades about 0.22 of its potential returns per unit of risk. GigaMedia is currently generating about 0.18 per unit of risk. If you would invest 1,769 in PENN NATL GAMING on October 20, 2024 and sell it today you would earn a total of 207.00 from holding PENN NATL GAMING or generate 11.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PENN NATL GAMING vs. GigaMedia
Performance |
| Timeline |
| PENN NATL GAMING |
| GigaMedia |
PENN NATL and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PENN NATL and GigaMedia
The main advantage of trading using opposite PENN NATL and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENN NATL 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.| PENN NATL vs. ITALIAN WINE BRANDS | PENN NATL vs. Zoom Video Communications | PENN NATL vs. FIH MOBILE | PENN NATL vs. Geely Automobile Holdings |
| GigaMedia vs. Spirent Communications plc | GigaMedia vs. Ribbon Communications | GigaMedia vs. COMBA TELECOM SYST | GigaMedia vs. Chengdu PUTIAN Telecommunications |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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