Correlation Between NXP Semiconductors and GigaMedia
Can any of the company-specific risk be diversified away by investing in both NXP Semiconductors 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 NXP Semiconductors and GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NXP Semiconductors NV and GigaMedia, you can compare the effects of market volatilities on NXP Semiconductors 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 NXP Semiconductors with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXP Semiconductors and GigaMedia.
Diversification Opportunities for NXP Semiconductors and GigaMedia
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between NXP and GigaMedia is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding NXP Semiconductors NV and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and NXP Semiconductors 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 NXP Semiconductors NV 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 NXP Semiconductors i.e., NXP Semiconductors and GigaMedia go up and down completely randomly.
Pair Corralation between NXP Semiconductors and GigaMedia
Assuming the 90 days trading horizon NXP Semiconductors NV is expected to under-perform the GigaMedia. In addition to that, NXP Semiconductors is 1.26 times more volatile than GigaMedia. It trades about -0.01 of its total potential returns per unit of risk. GigaMedia is currently generating about 0.18 per unit of volatility. If you would invest 122.00 in GigaMedia on August 29, 2024 and sell it today you would earn a total of 11.00 from holding GigaMedia or generate 9.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NXP Semiconductors NV vs. GigaMedia
Performance |
| Timeline |
| NXP Semiconductors |
| GigaMedia |
NXP Semiconductors and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NXP Semiconductors and GigaMedia
The main advantage of trading using opposite NXP Semiconductors and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NXP Semiconductors 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.| NXP Semiconductors vs. Apple Inc | NXP Semiconductors vs. Apple Inc | NXP Semiconductors vs. Microsoft | NXP Semiconductors vs. Microsoft |
| GigaMedia vs. GAMING FAC SA | GigaMedia vs. Digilife Technologies Limited | GigaMedia vs. CENTURIA OFFICE REIT | GigaMedia vs. OFFICE DEPOT |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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