Correlation Between REMEDY ENTERTAINMENT and GigaMedia

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

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

Diversification Opportunities for REMEDY ENTERTAINMENT and GigaMedia

-0.9

Correlation Coefficient

REMEDY ENTERTAINMENT  GigaMedia

Pay attention - limited upside

The 3 months correlation between REMEDY and GigaMedia is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding REMEDY ENTERTAINMENT OYJ and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and REMEDY ENTERTAINMENT 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 REMEDY ENTERTAINMENT OYJ 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 REMEDY ENTERTAINMENT i.e., REMEDY ENTERTAINMENT and GigaMedia go up and down completely randomly.

Pair Corralation between REMEDY ENTERTAINMENT and GigaMedia

Assuming the 90 days horizon REMEDY ENTERTAINMENT is expected to generate 1.51 times less return on investment than GigaMedia. In addition to that, REMEDY ENTERTAINMENT is 2.33 times more volatile than GigaMedia. It trades about 0.02 of its total potential returns per unit of risk. GigaMedia is currently generating about 0.08 per unit of volatility. If you would invest  135.00  in GigaMedia on October 7, 2024 and sell it today you would earn a total of  4.00  from holding GigaMedia or generate 2.96% return on investment over 90 days.

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

REMEDY ENTERTAINMENT OYJ  vs.  GigaMedia

REMEDY ENTERTAINMENT OYJ

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days REMEDY ENTERTAINMENT OYJ has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains 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 REMEDY ENTERTAINMENT and GigaMedia

The main advantage of trading using opposite REMEDY ENTERTAINMENT and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REMEDY ENTERTAINMENT 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 REMEDY ENTERTAINMENT OYJ 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.