Correlation Between GigaMedia and Nintendo

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

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

Diversification Opportunities for GigaMedia and Nintendo

-0.44

Correlation Coefficient

GigaMedia  Nintendo

Very good diversification

The 3 months correlation between GigaMedia and Nintendo is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and Nintendo Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nintendo 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 Nintendo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nintendo has no effect on the direction of GigaMedia i.e., GigaMedia and Nintendo go up and down completely randomly.

Pair Corralation between GigaMedia and Nintendo

Assuming the 90 days trading horizon GigaMedia is expected to generate 1.75 times less return on investment than Nintendo. But when comparing it to its historical volatility, GigaMedia is 1.37 times less risky than Nintendo. It trades about 0.08 of its potential returns per unit of risk. Nintendo Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  5,622  in Nintendo Co on December 29, 2024 and sell it today you would earn a total of  978.00  from holding Nintendo Co or generate 17.4% return on investment over 90 days.

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

GigaMedia  vs.  Nintendo Co

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

Nintendo

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nintendo Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nintendo reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GigaMedia and Nintendo

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

The idea behind GigaMedia and Nintendo Co 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.