Correlation Between GAMES OPERATORS and GigaMedia

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

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

Diversification Opportunities for GAMES OPERATORS and GigaMedia

-0.29

Correlation Coefficient

GAMES OPERATORS  GigaMedia

Very good diversification

The 3 months correlation between GAMES and GigaMedia is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding GAMES OPERATORS SA and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and GAMES OPERATORS 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 GAMES OPERATORS SA 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 GAMES OPERATORS i.e., GAMES OPERATORS and GigaMedia go up and down completely randomly.

Pair Corralation between GAMES OPERATORS and GigaMedia

Assuming the 90 days horizon GAMES OPERATORS SA is expected to generate 1.41 times more return on investment than GigaMedia. However, GAMES OPERATORS is 1.41 times more volatile than GigaMedia. It trades about 0.13 of its potential returns per unit of risk. GigaMedia is currently generating about 0.06 per unit of risk. If you would invest  325.00  in GAMES OPERATORS SA on December 23, 2024 and sell it today you would earn a total of  71.00  from holding GAMES OPERATORS SA or generate 21.85% return on investment over 90 days.

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

GAMES OPERATORS SA  vs.  GigaMedia

GAMES OPERATORS SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GAMES OPERATORS SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GAMES OPERATORS reported solid returns over the last few months and may actually be approaching a breakup point.

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 GAMES OPERATORS and GigaMedia

The main advantage of trading using opposite GAMES OPERATORS and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GAMES OPERATORS 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 GAMES OPERATORS SA 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.