Correlation Between GigaMedia and SCIENCE IN

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

By analyzing existing cross correlation between GigaMedia and SCIENCE IN SPORT, you can compare the effects of market volatilities on GigaMedia and SCIENCE IN 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 SCIENCE IN. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and SCIENCE IN.

Diversification Opportunities for GigaMedia and SCIENCE IN

0.1

Correlation Coefficient

GigaMedia  SCIENCE IN

Average diversification

The 3 months correlation between GigaMedia and SCIENCE is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and SCIENCE IN SPORT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCIENCE IN SPORT 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 SCIENCE IN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCIENCE IN SPORT has no effect on the direction of GigaMedia i.e., GigaMedia and SCIENCE IN go up and down completely randomly.

Pair Corralation between GigaMedia and SCIENCE IN

Assuming the 90 days trading horizon GigaMedia is expected to generate 0.53 times more return on investment than SCIENCE IN. However, GigaMedia is 1.9 times less risky than SCIENCE IN. It trades about 0.15 of its potential returns per unit of risk. SCIENCE IN SPORT is currently generating about 0.01 per unit of risk. If you would invest  121.00  in GigaMedia on October 23, 2024 and sell it today you would earn a total of  25.00  from holding GigaMedia or generate 20.66% return on investment over 90 days.

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

GigaMedia  vs.  SCIENCE IN SPORT

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.

SCIENCE IN SPORT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SCIENCE IN SPORT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SCIENCE IN is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GigaMedia and SCIENCE IN

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

The idea behind GigaMedia and SCIENCE IN SPORT 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.