Correlation Between Scientific Games and GigaMedia
Can any of the company-specific risk be diversified away by investing in both Scientific Games 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 Scientific Games and GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scientific Games and GigaMedia, you can compare the effects of market volatilities on Scientific Games 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 Scientific Games with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scientific Games and GigaMedia.
Diversification Opportunities for Scientific Games and GigaMedia
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Scientific and GigaMedia is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Scientific Games and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and Scientific Games 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 Scientific Games 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 Scientific Games i.e., Scientific Games and GigaMedia go up and down completely randomly.
Pair Corralation between Scientific Games and GigaMedia
Assuming the 90 days horizon Scientific Games is expected to generate 1.09 times less return on investment than GigaMedia. But when comparing it to its historical volatility, Scientific Games is 2.17 times less risky than GigaMedia. It trades about 0.05 of its potential returns per unit of risk. GigaMedia is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 140.00 in GigaMedia on November 2, 2024 and sell it today you would earn a total of 1.00 from holding GigaMedia or generate 0.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scientific Games vs. GigaMedia
Performance |
| Timeline |
| Scientific Games |
| GigaMedia |
Scientific Games and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scientific Games and GigaMedia
The main advantage of trading using opposite Scientific Games and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scientific Games 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.| Scientific Games vs. MGIC INVESTMENT | Scientific Games vs. CVW CLEANTECH INC | Scientific Games vs. Clean Energy Fuels | Scientific Games vs. Guangdong Investment Limited |
| GigaMedia vs. Fukuyama Transporting Co | GigaMedia vs. Gaztransport Technigaz SA | GigaMedia vs. BII Railway Transportation | GigaMedia vs. Semiconductor Manufacturing International |
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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