Correlation Between Algonquin Power and GigaMedia

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

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

Diversification Opportunities for Algonquin Power and GigaMedia

-0.24

Correlation Coefficient

Algonquin Power  GigaMedia

Very good diversification

The 3 months correlation between Algonquin and GigaMedia is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and Algonquin Power 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 Algonquin Power Utilities 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 Algonquin Power i.e., Algonquin Power and GigaMedia go up and down completely randomly.

Pair Corralation between Algonquin Power and GigaMedia

Assuming the 90 days horizon Algonquin Power Utilities is expected to generate 0.91 times more return on investment than GigaMedia. However, Algonquin Power Utilities is 1.1 times less risky than GigaMedia. It trades about 0.11 of its potential returns per unit of risk. GigaMedia is currently generating about 0.02 per unit of risk. If you would invest  420.00  in Algonquin Power Utilities on December 24, 2024 and sell it today you would earn a total of  47.00  from holding Algonquin Power Utilities or generate 11.19% return on investment over 90 days.

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

Algonquin Power Utilities  vs.  GigaMedia

Algonquin Power Utilities

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Algonquin Power Utilities are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Algonquin Power may actually be approaching a critical reversion point that can send shares even higher in April 2025.

GigaMedia

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GigaMedia are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, GigaMedia is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Algonquin Power and GigaMedia

The main advantage of trading using opposite Algonquin Power and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power 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 Algonquin Power Utilities 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 Commodity Directory module to find actively traded commodities issued by global exchanges.