Correlation Between GigaMedia and Yuexiu Transport

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

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

Diversification Opportunities for GigaMedia and Yuexiu Transport

0.08

Correlation Coefficient

GigaMedia  Yuexiu Transport

Significant diversification

The 3 months correlation between GigaMedia and Yuexiu is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and Yuexiu Transport Infrastructur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuexiu Transport Inf 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 Yuexiu Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuexiu Transport Inf has no effect on the direction of GigaMedia i.e., GigaMedia and Yuexiu Transport go up and down completely randomly.

Pair Corralation between GigaMedia and Yuexiu Transport

Assuming the 90 days trading horizon GigaMedia is expected to generate 0.94 times more return on investment than Yuexiu Transport. However, GigaMedia is 1.07 times less risky than Yuexiu Transport. It trades about 0.06 of its potential returns per unit of risk. Yuexiu Transport Infrastructure is currently generating about -0.01 per unit of risk. If you would invest  134.00  in GigaMedia on December 23, 2024 and sell it today you would earn a total of  8.00  from holding GigaMedia or generate 5.97% return on investment over 90 days.

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

GigaMedia  vs.  Yuexiu Transport Infrastructur

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 uncertain basic indicators, GigaMedia may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Yuexiu Transport Inf

Risk-Adjusted Performance

Very Weak

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

Pair Trading with GigaMedia and Yuexiu Transport

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

The idea behind GigaMedia and Yuexiu Transport Infrastructure 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.