Correlation Between GigaMedia and Eidesvik Offshore

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

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

Diversification Opportunities for GigaMedia and Eidesvik Offshore

0.29

Correlation Coefficient

GigaMedia  Eidesvik Offshore

Modest diversification

The 3 months correlation between GigaMedia and Eidesvik is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and Eidesvik Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eidesvik Offshore ASA 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 Eidesvik Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eidesvik Offshore ASA has no effect on the direction of GigaMedia i.e., GigaMedia and Eidesvik Offshore go up and down completely randomly.

Pair Corralation between GigaMedia and Eidesvik Offshore

Assuming the 90 days trading horizon GigaMedia is expected to generate 0.96 times more return on investment than Eidesvik Offshore. However, GigaMedia is 1.04 times less risky than Eidesvik Offshore. It trades about 0.05 of its potential returns per unit of risk. Eidesvik Offshore ASA is currently generating about -0.03 per unit of risk. If you would invest  133.00  in GigaMedia on November 29, 2024 and sell it today you would earn a total of  7.00  from holding GigaMedia or generate 5.26% return on investment over 90 days.

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

GigaMedia  vs.  Eidesvik Offshore ASA

GigaMedia

Risk-Adjusted Performance

Insignificant

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

Eidesvik Offshore ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eidesvik Offshore ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Eidesvik Offshore is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with GigaMedia and Eidesvik Offshore

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

The idea behind GigaMedia and Eidesvik Offshore ASA 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.