Correlation Between Orsted AS and GigaMedia

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

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

Diversification Opportunities for Orsted AS and GigaMedia

-0.87

Correlation Coefficient

Orsted AS  GigaMedia

Pay attention - limited upside

The 3 months correlation between Orsted and GigaMedia is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Orsted AS and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and Orsted AS 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 Orsted AS 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 Orsted AS i.e., Orsted AS and GigaMedia go up and down completely randomly.

Pair Corralation between Orsted AS and GigaMedia

Assuming the 90 days horizon Orsted AS is expected to under-perform the GigaMedia. In addition to that, Orsted AS is 1.99 times more volatile than GigaMedia. It trades about -0.02 of its total potential returns per unit of risk. GigaMedia is currently generating about 0.04 per unit of volatility. If you would invest  122.00  in GigaMedia on October 10, 2024 and sell it today you would earn a total of  35.00  from holding GigaMedia or generate 28.69% return on investment over 90 days.

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

Orsted AS  vs.  GigaMedia

Orsted AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orsted AS 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

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GigaMedia are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, GigaMedia unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orsted AS and GigaMedia

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

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.