Correlation Between DICKS Sporting and GigaMedia

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

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

Diversification Opportunities for DICKS Sporting and GigaMedia

0.2

Correlation Coefficient

DICKS Sporting  GigaMedia

Modest diversification

The 3 months correlation between DICKS and GigaMedia is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding DICKS Sporting Goods and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and DICKS Sporting 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 DICKS Sporting Goods 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 DICKS Sporting i.e., DICKS Sporting and GigaMedia go up and down completely randomly.

Pair Corralation between DICKS Sporting and GigaMedia

Assuming the 90 days horizon DICKS Sporting Goods is expected to under-perform the GigaMedia. In addition to that, DICKS Sporting is 1.29 times more volatile than GigaMedia. It trades about -0.15 of its total potential returns per unit of risk. GigaMedia is currently generating about 0.02 per unit of volatility. If you would invest  140.00  in GigaMedia on December 24, 2024 and sell it today you would earn a total of  2.00  from holding GigaMedia or generate 1.43% return on investment over 90 days.

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

DICKS Sporting Goods  vs.  GigaMedia

DICKS Sporting Goods

Risk-Adjusted Performance

Very Weak

Over the last 90 days DICKS Sporting Goods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

GigaMedia

Risk-Adjusted Performance

Insignificant

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 DICKS Sporting and GigaMedia

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