Correlation Between Giga Media and Integrated Media

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

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

Diversification Opportunities for Giga Media and Integrated Media

0.32

Correlation Coefficient

Giga Media  Integrated Media

Weak diversification

The 3 months correlation between Giga and Integrated is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Giga Media and Integrated Media Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integrated Media Tec and Giga Media 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 Giga Media are associated (or correlated) with Integrated Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integrated Media Tec has no effect on the direction of Giga Media i.e., Giga Media and Integrated Media go up and down completely randomly.

Pair Corralation between Giga Media and Integrated Media

Given the investment horizon of 90 days Giga Media is expected to generate 0.25 times more return on investment than Integrated Media. However, Giga Media is 3.95 times less risky than Integrated Media. It trades about 0.16 of its potential returns per unit of risk. Integrated Media Technology is currently generating about -0.07 per unit of risk. If you would invest  129.00  in Giga Media on January 26, 2024 and sell it today you would earn a total of  8.00  from holding Giga Media or generate 6.2% return on investment over 90 days.

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

Giga Media  vs.  Integrated Media Technology

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.

Integrated Media Tec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Integrated Media Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Giga Media and Integrated Media

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

The idea behind Giga Media and Integrated Media Technology 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.