Correlation Between Dno ASA and GigaMedia

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

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

Diversification Opportunities for Dno ASA and GigaMedia

0.09

Correlation Coefficient

Dno ASA  GigaMedia

Significant diversification

The 3 months correlation between Dno and GigaMedia is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Dno ASA and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and Dno ASA 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 Dno ASA 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 Dno ASA i.e., Dno ASA and GigaMedia go up and down completely randomly.

Pair Corralation between Dno ASA and GigaMedia

Assuming the 90 days horizon Dno ASA is expected to generate 1.23 times less return on investment than GigaMedia. In addition to that, Dno ASA is 1.32 times more volatile than GigaMedia. It trades about 0.02 of its total potential returns per unit of risk. GigaMedia is currently generating about 0.02 per unit of volatility. If you would invest  128.00  in GigaMedia on October 25, 2024 and sell it today you would earn a total of  18.00  from holding GigaMedia or generate 14.06% return on investment over 90 days.

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

Dno ASA  vs.  GigaMedia

Dno ASA

Risk-Adjusted Performance

4 of 100

Insignificant

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

GigaMedia

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GigaMedia are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, GigaMedia unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dno ASA and GigaMedia

The main advantage of trading using opposite Dno ASA and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dno ASA 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 Dno ASA 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.