Correlation Between GigaMedia and CLOVER HEALTH

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

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

Diversification Opportunities for GigaMedia and CLOVER HEALTH

-0.21

Correlation Coefficient

GigaMedia  CLOVER HEALTH

Very good diversification

The 3 months correlation between GigaMedia and CLOVER is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and CLOVER HEALTH INV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLOVER HEALTH INV and GigaMedia 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 GigaMedia are associated (or correlated) with CLOVER HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLOVER HEALTH INV has no effect on the direction of GigaMedia i.e., GigaMedia and CLOVER HEALTH go up and down completely randomly.

Pair Corralation between GigaMedia and CLOVER HEALTH

Assuming the 90 days trading horizon GigaMedia is expected to generate 2.46 times less return on investment than CLOVER HEALTH. In addition to that, GigaMedia is 1.05 times more volatile than CLOVER HEALTH INV. It trades about 0.17 of its total potential returns per unit of risk. CLOVER HEALTH INV is currently generating about 0.43 per unit of volatility. If you would invest  307.00  in CLOVER HEALTH INV on October 23, 2024 and sell it today you would earn a total of  77.00  from holding CLOVER HEALTH INV or generate 25.08% return on investment over 90 days.

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

GigaMedia  vs.  CLOVER HEALTH INV

GigaMedia

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GigaMedia are ranked lower than 11 (%) 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.

CLOVER HEALTH INV

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CLOVER HEALTH INV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CLOVER HEALTH reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GigaMedia and CLOVER HEALTH

The main advantage of trading using opposite GigaMedia and CLOVER HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, CLOVER HEALTH 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 CLOVER HEALTH will offset losses from the drop in CLOVER HEALTH's long position.

The idea behind GigaMedia and CLOVER HEALTH INV 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.