Correlation Between MAGNUM MINING and GigaMedia

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

By analyzing existing cross correlation between MAGNUM MINING EXP and GigaMedia, you can compare the effects of market volatilities on MAGNUM MINING and GigaMedia 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 MAGNUM MINING with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGNUM MINING and GigaMedia.

Diversification Opportunities for MAGNUM MINING and GigaMedia

0.13

Correlation Coefficient

MAGNUM MINING  GigaMedia

Average diversification

The 3 months correlation between MAGNUM and GigaMedia is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding MAGNUM MINING EXP and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and MAGNUM MINING 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 MAGNUM MINING EXP are associated (or correlated) with GigaMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GigaMedia has no effect on the direction of MAGNUM MINING i.e., MAGNUM MINING and GigaMedia go up and down completely randomly.

Pair Corralation between MAGNUM MINING and GigaMedia

Assuming the 90 days trading horizon MAGNUM MINING EXP is expected to under-perform the GigaMedia. But the stock apears to be less risky and, when comparing its historical volatility, MAGNUM MINING EXP is 1.26 times less risky than GigaMedia. The stock trades about -0.04 of its potential returns per unit of risk. The GigaMedia is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  126.00  in GigaMedia on December 5, 2024 and sell it today you would earn a total of  12.00  from holding GigaMedia or generate 9.52% return on investment over 90 days.

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

MAGNUM MINING EXP  vs.  GigaMedia

MAGNUM MINING EXP

Risk-Adjusted Performance

Very Weak

Over the last 90 days MAGNUM MINING EXP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

GigaMedia

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GigaMedia are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, GigaMedia is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with MAGNUM MINING and GigaMedia

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

The idea behind MAGNUM MINING EXP and GigaMedia 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.