Correlation Between Wayside Technology and GigaMedia

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

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

Diversification Opportunities for Wayside Technology and GigaMedia

0.12

Correlation Coefficient

Wayside Technology  GigaMedia

Average diversification

The 3 months correlation between Wayside and GigaMedia is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Wayside Technology Group and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and Wayside Technology 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 Wayside Technology Group 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 Wayside Technology i.e., Wayside Technology and GigaMedia go up and down completely randomly.

Pair Corralation between Wayside Technology and GigaMedia

Assuming the 90 days horizon Wayside Technology Group is expected to under-perform the GigaMedia. In addition to that, Wayside Technology is 1.64 times more volatile than GigaMedia. It trades about -0.06 of its total potential returns per unit of risk. GigaMedia is currently generating about 0.02 per unit of volatility. If you would invest  140.00  in GigaMedia on December 24, 2024 and sell it today you would earn a total of  2.00  from holding GigaMedia or generate 1.43% return on investment over 90 days.

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

Wayside Technology Group  vs.  GigaMedia

Wayside Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wayside Technology Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GigaMedia are ranked lower than 1 (%) 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 Wayside Technology and GigaMedia

The main advantage of trading using opposite Wayside Technology and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wayside Technology 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 Wayside Technology Group 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.