Correlation Between Impinj and GigaMedia

Can any of the company-specific risk be diversified away by investing in both Impinj 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 Impinj and GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Impinj Inc and GigaMedia, you can compare the effects of market volatilities on Impinj 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 Impinj with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Impinj and GigaMedia.

Diversification Opportunities for Impinj and GigaMedia

-0.75

Correlation Coefficient

Impinj  GigaMedia

Pay attention - limited upside

The 3 months correlation between Impinj and GigaMedia is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Impinj Inc and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and Impinj 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 Impinj Inc 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 Impinj i.e., Impinj and GigaMedia go up and down completely randomly.

Pair Corralation between Impinj and GigaMedia

Assuming the 90 days horizon Impinj Inc is expected to generate 2.23 times more return on investment than GigaMedia. However, Impinj is 2.23 times more volatile than GigaMedia. It trades about 0.09 of its potential returns per unit of risk. GigaMedia is currently generating about 0.04 per unit of risk. If you would invest  7,520  in Impinj Inc on October 7, 2024 and sell it today you would earn a total of  6,955  from holding Impinj Inc or generate 92.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Impinj Inc  vs.  GigaMedia

Impinj Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Impinj Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

GigaMedia

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GigaMedia are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, GigaMedia unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Impinj and GigaMedia

The main advantage of trading using opposite Impinj and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Impinj 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.

The idea behind Impinj Inc and GigaMedia pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.