Correlation Between TC Energy and GigaMedia
Can any of the company-specific risk be diversified away by investing in both TC Energy 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 TC Energy and GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TC Energy and GigaMedia, you can compare the effects of market volatilities on TC Energy 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 TC Energy with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of TC Energy and GigaMedia.
Diversification Opportunities for TC Energy and GigaMedia
Very poor diversification
The 3 months correlation between TRS and GigaMedia is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding TC Energy and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and TC Energy 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 TC Energy 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 TC Energy i.e., TC Energy and GigaMedia go up and down completely randomly.
Pair Corralation between TC Energy and GigaMedia
Assuming the 90 days horizon TC Energy is expected to generate 1.75 times more return on investment than GigaMedia. However, TC Energy is 1.75 times more volatile than GigaMedia. It trades about -0.06 of its potential returns per unit of risk. GigaMedia is currently generating about -0.11 per unit of risk. If you would invest 4,631 in TC Energy on September 12, 2024 and sell it today you would lose (68.00) from holding TC Energy or give up 1.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TC Energy vs. GigaMedia
Performance |
| Timeline |
| TC Energy |
| GigaMedia |
TC Energy and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TC Energy and GigaMedia
The main advantage of trading using opposite TC Energy and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TC Energy 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.| TC Energy vs. Tri Pointe Homes | TC Energy vs. GEELY AUTOMOBILE | TC Energy vs. Taylor Morrison Home | TC Energy vs. COMMERCIAL VEHICLE |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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