Correlation Between GigaMedia and Ralph Lauren
Can any of the company-specific risk be diversified away by investing in both GigaMedia and Ralph Lauren 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 Ralph Lauren into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and Ralph Lauren, you can compare the effects of market volatilities on GigaMedia and Ralph Lauren 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 Ralph Lauren. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and Ralph Lauren.
Diversification Opportunities for GigaMedia and Ralph Lauren
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GigaMedia and Ralph is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and Ralph Lauren in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ralph Lauren 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 Ralph Lauren. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ralph Lauren has no effect on the direction of GigaMedia i.e., GigaMedia and Ralph Lauren go up and down completely randomly.
Pair Corralation between GigaMedia and Ralph Lauren
Assuming the 90 days trading horizon GigaMedia is expected to generate 3.43 times less return on investment than Ralph Lauren. But when comparing it to its historical volatility, GigaMedia is 1.31 times less risky than Ralph Lauren. It trades about 0.03 of its potential returns per unit of risk. Ralph Lauren is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 9,427 in Ralph Lauren on September 23, 2024 and sell it today you would earn a total of 11,648 from holding Ralph Lauren or generate 123.56% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
GigaMedia vs. Ralph Lauren
Performance |
Timeline |
GigaMedia |
Ralph Lauren |
GigaMedia and Ralph Lauren Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GigaMedia and Ralph Lauren
The main advantage of trading using opposite GigaMedia and Ralph Lauren positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, Ralph Lauren 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 Ralph Lauren will offset losses from the drop in Ralph Lauren's long position.GigaMedia vs. MAGIC SOFTWARE ENTR | GigaMedia vs. Haverty Furniture Companies | GigaMedia vs. URBAN OUTFITTERS | GigaMedia vs. American Homes 4 |
Ralph Lauren vs. GALENA MINING LTD | Ralph Lauren vs. GigaMedia | Ralph Lauren vs. Games Workshop Group | Ralph Lauren vs. Harmony Gold Mining |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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