Correlation Between GigaCloud Technology and Stem
Can any of the company-specific risk be diversified away by investing in both GigaCloud Technology and Stem 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 GigaCloud Technology and Stem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GigaCloud Technology Class and Stem Inc, you can compare the effects of market volatilities on GigaCloud Technology and Stem 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 GigaCloud Technology with a short position of Stem. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaCloud Technology and Stem.
Diversification Opportunities for GigaCloud Technology and Stem
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GigaCloud and Stem is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding GigaCloud Technology Class and Stem Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stem Inc and GigaCloud Technology 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 GigaCloud Technology Class are associated (or correlated) with Stem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stem Inc has no effect on the direction of GigaCloud Technology i.e., GigaCloud Technology and Stem go up and down completely randomly.
Pair Corralation between GigaCloud Technology and Stem
Considering the 90-day investment horizon GigaCloud Technology Class is expected to generate 0.8 times more return on investment than Stem. However, GigaCloud Technology Class is 1.26 times less risky than Stem. It trades about 0.06 of its potential returns per unit of risk. Stem Inc is currently generating about -0.16 per unit of risk. If you would invest 2,455 in GigaCloud Technology Class on August 28, 2024 and sell it today you would earn a total of 94.00 from holding GigaCloud Technology Class or generate 3.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GigaCloud Technology Class vs. Stem Inc
Performance |
| Timeline |
| GigaCloud Technology |
| Stem Inc |
GigaCloud Technology and Stem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GigaCloud Technology and Stem
The main advantage of trading using opposite GigaCloud Technology and Stem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaCloud Technology position performs unexpectedly, Stem 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 Stem will offset losses from the drop in Stem's long position.| GigaCloud Technology vs. Steven Madden | GigaCloud Technology vs. Vera Bradley | GigaCloud Technology vs. Caleres | GigaCloud Technology vs. Rocky Brands |
| Stem vs. Palo Alto Networks | Stem vs. Crowdstrike Holdings | Stem vs. Cloudflare | Stem vs. Palantir Technologies |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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