Correlation Between GigaMedia and GRIFFIN MINING

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

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

Diversification Opportunities for GigaMedia and GRIFFIN MINING

-0.36

Correlation Coefficient

GigaMedia  GRIFFIN MINING

Very good diversification

The 3 months correlation between GigaMedia and GRIFFIN is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and GRIFFIN MINING LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRIFFIN MINING LTD 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 GRIFFIN MINING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRIFFIN MINING LTD has no effect on the direction of GigaMedia i.e., GigaMedia and GRIFFIN MINING go up and down completely randomly.

Pair Corralation between GigaMedia and GRIFFIN MINING

Assuming the 90 days trading horizon GigaMedia is expected to generate 11.32 times less return on investment than GRIFFIN MINING. But when comparing it to its historical volatility, GigaMedia is 1.47 times less risky than GRIFFIN MINING. It trades about 0.02 of its potential returns per unit of risk. GRIFFIN MINING LTD is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  171.00  in GRIFFIN MINING LTD on December 24, 2024 and sell it today you would earn a total of  49.00  from holding GRIFFIN MINING LTD or generate 28.65% return on investment over 90 days.

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

GigaMedia  vs.  GRIFFIN MINING LTD

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.

GRIFFIN MINING LTD

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GRIFFIN MINING LTD are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, GRIFFIN MINING reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GigaMedia and GRIFFIN MINING

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

The idea behind GigaMedia and GRIFFIN MINING LTD 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.