Correlation Between STORE ELECTRONIC and GigaMedia
Can any of the company-specific risk be diversified away by investing in both STORE ELECTRONIC 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 STORE ELECTRONIC and GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STORE ELECTRONIC and GigaMedia, you can compare the effects of market volatilities on STORE ELECTRONIC 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 STORE ELECTRONIC with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of STORE ELECTRONIC and GigaMedia.
Diversification Opportunities for STORE ELECTRONIC and GigaMedia
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between STORE and GigaMedia is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding STORE ELECTRONIC and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and STORE ELECTRONIC 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 STORE ELECTRONIC 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 STORE ELECTRONIC i.e., STORE ELECTRONIC and GigaMedia go up and down completely randomly.
Pair Corralation between STORE ELECTRONIC and GigaMedia
Assuming the 90 days trading horizon STORE ELECTRONIC is expected to generate 1.39 times more return on investment than GigaMedia. However, STORE ELECTRONIC is 1.39 times more volatile than GigaMedia. It trades about 0.15 of its potential returns per unit of risk. GigaMedia is currently generating about 0.11 per unit of risk. If you would invest 14,020 in STORE ELECTRONIC on October 30, 2024 and sell it today you would earn a total of 2,470 from holding STORE ELECTRONIC or generate 17.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STORE ELECTRONIC vs. GigaMedia
Performance |
| Timeline |
| STORE ELECTRONIC |
| GigaMedia |
STORE ELECTRONIC and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STORE ELECTRONIC and GigaMedia
The main advantage of trading using opposite STORE ELECTRONIC and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STORE ELECTRONIC 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.| STORE ELECTRONIC vs. Apple Inc | STORE ELECTRONIC vs. Apple Inc | STORE ELECTRONIC vs. Apple Inc | STORE ELECTRONIC vs. Apple Inc |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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