Correlation Between CubeSmart and GigaMedia

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

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

Diversification Opportunities for CubeSmart and GigaMedia

-0.39

Correlation Coefficient

CubeSmart  GigaMedia

Very good diversification

The 3 months correlation between CubeSmart and GigaMedia is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding CubeSmart and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and CubeSmart 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 CubeSmart 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 CubeSmart i.e., CubeSmart and GigaMedia go up and down completely randomly.

Pair Corralation between CubeSmart and GigaMedia

Assuming the 90 days horizon CubeSmart is expected to generate 1.49 times less return on investment than GigaMedia. But when comparing it to its historical volatility, CubeSmart is 1.05 times less risky than GigaMedia. It trades about 0.03 of its potential returns per unit of risk. GigaMedia is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  126.00  in GigaMedia on October 3, 2024 and sell it today you would earn a total of  17.00  from holding GigaMedia or generate 13.49% return on investment over 90 days.

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

CubeSmart  vs.  GigaMedia

CubeSmart

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CubeSmart has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

GigaMedia

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GigaMedia are ranked lower than 16 (%) 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.

Pair Trading with CubeSmart and GigaMedia

The main advantage of trading using opposite CubeSmart and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CubeSmart 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 CubeSmart 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.