Correlation Between Activision Blizzard and Giga Media

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

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

Diversification Opportunities for Activision Blizzard and Giga Media

-0.35

Correlation Coefficient

Activision Blizzard  Giga Media

Very good diversification

The 3 months correlation between Activision and Giga is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Activision Blizzard and Giga Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Giga Media and Activision Blizzard 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 Activision Blizzard are associated (or correlated) with Giga Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Giga Media has no effect on the direction of Activision Blizzard i.e., Activision Blizzard and Giga Media go up and down completely randomly.

Pair Corralation between Activision Blizzard and Giga Media

Given the investment horizon of 90 days Activision Blizzard is expected to generate 0.48 times more return on investment than Giga Media. However, Activision Blizzard is 2.1 times less risky than Giga Media. It trades about 0.05 of its potential returns per unit of risk. Giga Media is currently generating about 0.0 per unit of risk. If you would invest  7,701  in Activision Blizzard on January 26, 2024 and sell it today you would earn a total of  1,741  from holding Activision Blizzard or generate 22.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	73.48%
Values	Daily Returns

Activision Blizzard  vs.  Giga Media

Activision Blizzard

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Activision Blizzard has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Activision Blizzard is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Giga Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Giga Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Giga Media is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Activision Blizzard and Giga Media

The main advantage of trading using opposite Activision Blizzard and Giga Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Activision Blizzard position performs unexpectedly, Giga Media 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 Giga Media will offset losses from the drop in Giga Media's long position.

The idea behind Activision Blizzard and Giga Media 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.