Correlation Between GigaMedia and Advanced Info

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

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

Diversification Opportunities for GigaMedia and Advanced Info

0.07

Correlation Coefficient

GigaMedia  Advanced Info

Significant diversification

The 3 months correlation between GigaMedia and Advanced is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and Advanced Info Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Info Service 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 Advanced Info. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Info Service has no effect on the direction of GigaMedia i.e., GigaMedia and Advanced Info go up and down completely randomly.

Pair Corralation between GigaMedia and Advanced Info

Assuming the 90 days trading horizon GigaMedia is expected to generate 1.36 times more return on investment than Advanced Info. However, GigaMedia is 1.36 times more volatile than Advanced Info Service. It trades about 0.02 of its potential returns per unit of risk. Advanced Info Service is currently generating about -0.11 per unit of risk. If you would invest  140.00  in GigaMedia on December 25, 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	Insignificant
Accuracy	98.36%
Values	Daily Returns

GigaMedia  vs.  Advanced Info Service

GigaMedia

Risk-Adjusted Performance

Weak

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.

Advanced Info Service

Risk-Adjusted Performance

Very Weak

Over the last 90 days Advanced Info Service has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with GigaMedia and Advanced Info

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

The idea behind GigaMedia and Advanced Info Service 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.