Correlation Between GigaMedia and Esprinet SpA

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

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

Diversification Opportunities for GigaMedia and Esprinet SpA

-0.18

Correlation Coefficient

GigaMedia  Esprinet SpA

Good diversification

The 3 months correlation between GigaMedia and Esprinet is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and Esprinet SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esprinet SpA 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 Esprinet SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esprinet SpA has no effect on the direction of GigaMedia i.e., GigaMedia and Esprinet SpA go up and down completely randomly.

Pair Corralation between GigaMedia and Esprinet SpA

Assuming the 90 days trading horizon GigaMedia is expected to generate 1.91 times less return on investment than Esprinet SpA. But when comparing it to its historical volatility, GigaMedia is 1.17 times less risky than Esprinet SpA. It trades about 0.08 of its potential returns per unit of risk. Esprinet SpA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  422.00  in Esprinet SpA on December 29, 2024 and sell it today you would earn a total of  87.00  from holding Esprinet SpA or generate 20.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

GigaMedia  vs.  Esprinet SpA

GigaMedia

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GigaMedia are ranked lower than 6 (%) 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 April 2025.

Esprinet SpA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Esprinet SpA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Esprinet SpA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GigaMedia and Esprinet SpA

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

The idea behind GigaMedia and Esprinet SpA 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.