Correlation Between United Internet and GigaMedia
Can any of the company-specific risk be diversified away by investing in both United Internet 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 United Internet and GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Internet AG and GigaMedia, you can compare the effects of market volatilities on United Internet 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 United Internet with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Internet and GigaMedia.
Diversification Opportunities for United Internet and GigaMedia
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and GigaMedia is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding United Internet AG and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and United Internet 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 United Internet AG 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 United Internet i.e., United Internet and GigaMedia go up and down completely randomly.
Pair Corralation between United Internet and GigaMedia
Assuming the 90 days trading horizon United Internet AG is expected to under-perform the GigaMedia. In addition to that, United Internet is 1.26 times more volatile than GigaMedia. It trades about -0.09 of its total potential returns per unit of risk. GigaMedia is currently generating about 0.13 per unit of volatility. If you would invest 115.00 in GigaMedia on September 12, 2024 and sell it today you would earn a total of 18.00 from holding GigaMedia or generate 15.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Internet AG vs. GigaMedia
Performance |
| Timeline |
| United Internet AG |
| GigaMedia |
United Internet and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Internet and GigaMedia
The main advantage of trading using opposite United Internet and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Internet 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.| United Internet vs. Superior Plus Corp | United Internet vs. SIVERS SEMICONDUCTORS AB | United Internet vs. Norsk Hydro ASA | United Internet vs. Reliance Steel Aluminum |
| GigaMedia vs. Titan Machinery | GigaMedia vs. AUST AGRICULTURAL | GigaMedia vs. North American Construction | GigaMedia vs. ALEFARM BREWING DK 05 |
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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