Correlation Between Live Nation and GigaMedia

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

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

Diversification Opportunities for Live Nation and GigaMedia

-0.22

Correlation Coefficient

Live Nation  GigaMedia

Very good diversification

The 3 months correlation between Live and GigaMedia is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and Live Nation 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 Live Nation Entertainment 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 Live Nation i.e., Live Nation and GigaMedia go up and down completely randomly.

Pair Corralation between Live Nation and GigaMedia

Assuming the 90 days horizon Live Nation is expected to generate 1.66 times less return on investment than GigaMedia. But when comparing it to its historical volatility, Live Nation Entertainment is 1.46 times less risky than GigaMedia. It trades about 0.05 of its potential returns per unit of risk. GigaMedia is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  134.00  in GigaMedia on December 2, 2024 and sell it today you would earn a total of  7.00  from holding GigaMedia or generate 5.22% return on investment over 90 days.

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

Live Nation Entertainment  vs.  GigaMedia

Live Nation Entertainment

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Live Nation Entertainment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Live Nation is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

GigaMedia

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GigaMedia are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, GigaMedia may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Live Nation and GigaMedia

The main advantage of trading using opposite Live Nation and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation 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 Live Nation Entertainment 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.