Correlation Between Ubisoft Entertainment and GigaMedia

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

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

Diversification Opportunities for Ubisoft Entertainment and GigaMedia

0.21

Correlation Coefficient

Ubisoft Entertainment  GigaMedia

Modest diversification

The 3 months correlation between Ubisoft and GigaMedia is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ubisoft Entertainment SA and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and Ubisoft Entertainment 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 Ubisoft Entertainment SA 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 Ubisoft Entertainment i.e., Ubisoft Entertainment and GigaMedia go up and down completely randomly.

Pair Corralation between Ubisoft Entertainment and GigaMedia

Assuming the 90 days horizon Ubisoft Entertainment is expected to generate 4.61 times less return on investment than GigaMedia. In addition to that, Ubisoft Entertainment is 2.68 times more volatile than GigaMedia. It trades about 0.01 of its total potential returns per unit of risk. GigaMedia is currently generating about 0.13 per unit of volatility. If you would invest  115.00  in GigaMedia on September 18, 2024 and sell it today you would earn a total of  18.00  from holding GigaMedia or generate 15.65% return on investment over 90 days.

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

Ubisoft Entertainment SA  vs.  GigaMedia

Ubisoft Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

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

GigaMedia

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GigaMedia are ranked lower than 10 (%) 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 Ubisoft Entertainment and GigaMedia

The main advantage of trading using opposite Ubisoft Entertainment and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ubisoft Entertainment 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 Ubisoft Entertainment SA 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.