Correlation Between VULCAN MATERIALS and GigaMedia
Can any of the company-specific risk be diversified away by investing in both VULCAN MATERIALS 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 VULCAN MATERIALS and GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VULCAN MATERIALS and GigaMedia, you can compare the effects of market volatilities on VULCAN MATERIALS 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 VULCAN MATERIALS with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of VULCAN MATERIALS and GigaMedia.
Diversification Opportunities for VULCAN MATERIALS and GigaMedia
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between VULCAN and GigaMedia is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding VULCAN MATERIALS and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and VULCAN MATERIALS 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 VULCAN MATERIALS 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 VULCAN MATERIALS i.e., VULCAN MATERIALS and GigaMedia go up and down completely randomly.
Pair Corralation between VULCAN MATERIALS and GigaMedia
Assuming the 90 days trading horizon VULCAN MATERIALS is expected to generate 67.52 times less return on investment than GigaMedia. But when comparing it to its historical volatility, VULCAN MATERIALS is 2.32 times less risky than GigaMedia. It trades about 0.01 of its potential returns per unit of risk. GigaMedia is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 133.00 in GigaMedia on October 19, 2024 and sell it today you would earn a total of 15.00 from holding GigaMedia or generate 11.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
VULCAN MATERIALS vs. GigaMedia
Performance |
| Timeline |
| VULCAN MATERIALS |
| GigaMedia |
VULCAN MATERIALS and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VULCAN MATERIALS and GigaMedia
The main advantage of trading using opposite VULCAN MATERIALS and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VULCAN MATERIALS 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.| VULCAN MATERIALS vs. TROPHY GAMES DEV | VULCAN MATERIALS vs. PENN NATL GAMING | VULCAN MATERIALS vs. QINGCI GAMES INC | VULCAN MATERIALS vs. Penn National Gaming |
| GigaMedia vs. VULCAN MATERIALS | GigaMedia vs. APPLIED MATERIALS | GigaMedia vs. Applied Materials | GigaMedia vs. Nordic Semiconductor ASA |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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