Correlation Between GigaMedia and Perma Fix

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

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

Diversification Opportunities for GigaMedia and Perma Fix

-0.01

Correlation Coefficient

GigaMedia  Perma Fix

Good diversification

The 3 months correlation between GigaMedia and Perma is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and Perma Fix Environmental Servic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perma Fix Environmental 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 Perma Fix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perma Fix Environmental has no effect on the direction of GigaMedia i.e., GigaMedia and Perma Fix go up and down completely randomly.

Pair Corralation between GigaMedia and Perma Fix

Assuming the 90 days trading horizon GigaMedia is expected to generate 0.39 times more return on investment than Perma Fix. However, GigaMedia is 2.55 times less risky than Perma Fix. It trades about 0.19 of its potential returns per unit of risk. Perma Fix Environmental Services is currently generating about -0.01 per unit of risk. If you would invest  117.00  in GigaMedia on October 5, 2024 and sell it today you would earn a total of  23.00  from holding GigaMedia or generate 19.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

GigaMedia  vs.  Perma Fix Environmental Servic

GigaMedia

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days GigaMedia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, GigaMedia unveiled solid returns over the last few months and may actually be approaching a breakup point.

Perma Fix Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perma Fix Environmental Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Perma Fix 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 Perma Fix

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

The idea behind GigaMedia and Perma Fix Environmental Services 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.