Correlation Between GigaMedia and CeoTronics
Can any of the company-specific risk be diversified away by investing in both GigaMedia and CeoTronics 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 GigaMedia and CeoTronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaMedia and CeoTronics AG, you can compare the effects of market volatilities on GigaMedia and CeoTronics 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 GigaMedia with a short position of CeoTronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaMedia and CeoTronics.
Diversification Opportunities for GigaMedia and CeoTronics
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GigaMedia and CeoTronics is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia and CeoTronics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CeoTronics AG and GigaMedia 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 GigaMedia are associated (or correlated) with CeoTronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CeoTronics AG has no effect on the direction of GigaMedia i.e., GigaMedia and CeoTronics go up and down completely randomly.
Pair Corralation between GigaMedia and CeoTronics
Assuming the 90 days trading horizon GigaMedia is expected to generate 1.18 times less return on investment than CeoTronics. But when comparing it to its historical volatility, GigaMedia is 1.64 times less risky than CeoTronics. It trades about 0.12 of its potential returns per unit of risk. CeoTronics AG is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 511.00 in CeoTronics AG on September 24, 2024 and sell it today you would earn a total of 74.00 from holding CeoTronics AG or generate 14.48% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
GigaMedia vs. CeoTronics AG
Performance |
Timeline |
GigaMedia |
CeoTronics AG |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
GigaMedia and CeoTronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GigaMedia and CeoTronics
The main advantage of trading using opposite GigaMedia and CeoTronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia position performs unexpectedly, CeoTronics 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 CeoTronics will offset losses from the drop in CeoTronics' long position.GigaMedia vs. COMBA TELECOM SYST | GigaMedia vs. GREENX METALS LTD | GigaMedia vs. Iridium Communications | GigaMedia vs. PARKEN Sport Entertainment |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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