Correlation Between GigaMedia and XTANT MEDICAL

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Can any of the company-specific risk be diversified away by investing in both GigaMedia and XTANT MEDICAL 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 XTANT MEDICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and XTANT MEDICAL HLDGS, you can compare the effects of market volatilities on GigaMedia and XTANT MEDICAL 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 XTANT MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and XTANT MEDICAL.

Diversification Opportunities for GigaMedia and XTANT MEDICAL

-0.71
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between GigaMedia and XTANT is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and XTANT MEDICAL HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XTANT MEDICAL HLDGS 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 XTANT MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XTANT MEDICAL HLDGS has no effect on the direction of GigaMedia i.e., GigaMedia and XTANT MEDICAL go up and down completely randomly.

Pair Corralation between GigaMedia and XTANT MEDICAL

Assuming the 90 days trading horizon GigaMedia is expected to generate 8.19 times less return on investment than XTANT MEDICAL. But when comparing it to its historical volatility, GigaMedia is 5.3 times less risky than XTANT MEDICAL. It trades about 0.08 of its potential returns per unit of risk. XTANT MEDICAL HLDGS is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  36.00  in XTANT MEDICAL HLDGS on October 7, 2024 and sell it today you would earn a total of  8.00  from holding XTANT MEDICAL HLDGS or generate 22.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

GigaMedia  vs.  XTANT MEDICAL HLDGS

 Performance 
       Timeline  
GigaMedia 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in GigaMedia are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, GigaMedia unveiled solid returns over the last few months and may actually be approaching a breakup point.
XTANT MEDICAL HLDGS 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days XTANT MEDICAL HLDGS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

GigaMedia and XTANT MEDICAL Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GigaMedia and XTANT MEDICAL

The main advantage of trading using opposite GigaMedia and XTANT MEDICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, XTANT MEDICAL 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 XTANT MEDICAL will offset losses from the drop in XTANT MEDICAL's long position.
The idea behind GigaMedia and XTANT MEDICAL HLDGS 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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