Correlation Between Shenandoah Telecommunicatio and GigaMedia

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

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

Diversification Opportunities for Shenandoah Telecommunicatio and GigaMedia

0.0

Correlation Coefficient

Shenandoah Telecommunicatio  GigaMedia

Pay attention - limited upside

The 3 months correlation between Shenandoah and GigaMedia is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Shenandoah Telecommunications and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and Shenandoah Telecommunicatio 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 Shenandoah Telecommunications 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 Shenandoah Telecommunicatio i.e., Shenandoah Telecommunicatio and GigaMedia go up and down completely randomly.

Pair Corralation between Shenandoah Telecommunicatio and GigaMedia

Assuming the 90 days horizon Shenandoah Telecommunications is expected to generate 2.51 times more return on investment than GigaMedia. However, Shenandoah Telecommunicatio is 2.51 times more volatile than GigaMedia. It trades about 0.26 of its potential returns per unit of risk. GigaMedia is currently generating about 0.17 per unit of risk. If you would invest  1,040  in Shenandoah Telecommunications on December 24, 2024 and sell it today you would earn a total of  120.00  from holding Shenandoah Telecommunications or generate 11.54% return on investment over 90 days.

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

Shenandoah Telecommunications  vs.  GigaMedia

Shenandoah Telecommunicatio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shenandoah Telecommunications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Shenandoah Telecommunicatio is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

GigaMedia

Risk-Adjusted Performance

Weak

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 Shenandoah Telecommunicatio and GigaMedia

The main advantage of trading using opposite Shenandoah Telecommunicatio and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenandoah Telecommunicatio 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 Shenandoah Telecommunications 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.