Correlation Between WOOLWORTHS HLDGS and GigaMedia

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

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

Diversification Opportunities for WOOLWORTHS HLDGS and GigaMedia

-0.29

Correlation Coefficient

WOOLWORTHS HLDGS  GigaMedia

Very good diversification

The 3 months correlation between WOOLWORTHS and GigaMedia is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding WOOLWORTHS HLDGS and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and WOOLWORTHS HLDGS 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 WOOLWORTHS HLDGS 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 WOOLWORTHS HLDGS i.e., WOOLWORTHS HLDGS and GigaMedia go up and down completely randomly.

Pair Corralation between WOOLWORTHS HLDGS and GigaMedia

Assuming the 90 days trading horizon WOOLWORTHS HLDGS is expected to under-perform the GigaMedia. In addition to that, WOOLWORTHS HLDGS is 1.09 times more volatile than GigaMedia. It trades about -0.06 of its total potential returns per unit of risk. GigaMedia is currently generating about 0.19 per unit of volatility. If you would invest  117.00  in GigaMedia on October 5, 2024 and sell it today you would earn a total of  23.00  from holding GigaMedia or generate 19.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

WOOLWORTHS HLDGS  vs.  GigaMedia

WOOLWORTHS HLDGS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WOOLWORTHS HLDGS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

GigaMedia

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days GigaMedia has generated negative risk-adjusted returns adding no value to investors with long positions. 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 WOOLWORTHS HLDGS and GigaMedia

The main advantage of trading using opposite WOOLWORTHS HLDGS and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WOOLWORTHS HLDGS 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 WOOLWORTHS HLDGS 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.