Correlation Between Cloudflare and GigaCloud Technology
Can any of the company-specific risk be diversified away by investing in both Cloudflare and GigaCloud Technology 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 Cloudflare and GigaCloud Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cloudflare and GigaCloud Technology Class, you can compare the effects of market volatilities on Cloudflare and GigaCloud Technology 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 Cloudflare with a short position of GigaCloud Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cloudflare and GigaCloud Technology.
Diversification Opportunities for Cloudflare and GigaCloud Technology
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cloudflare and GigaCloud is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Cloudflare and GigaCloud Technology Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaCloud Technology and Cloudflare 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 Cloudflare are associated (or correlated) with GigaCloud Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GigaCloud Technology has no effect on the direction of Cloudflare i.e., Cloudflare and GigaCloud Technology go up and down completely randomly.
Pair Corralation between Cloudflare and GigaCloud Technology
Considering the 90-day investment horizon Cloudflare is expected to generate 0.46 times more return on investment than GigaCloud Technology. However, Cloudflare is 2.18 times less risky than GigaCloud Technology. It trades about 0.27 of its potential returns per unit of risk. GigaCloud Technology Class is currently generating about 0.06 per unit of risk. If you would invest 8,794 in Cloudflare on August 28, 2024 and sell it today you would earn a total of 1,579 from holding Cloudflare or generate 17.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cloudflare vs. GigaCloud Technology Class
Performance |
| Timeline |
| Cloudflare |
| GigaCloud Technology |
Cloudflare and GigaCloud Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cloudflare and GigaCloud Technology
The main advantage of trading using opposite Cloudflare and GigaCloud Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cloudflare position performs unexpectedly, GigaCloud Technology 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 GigaCloud Technology will offset losses from the drop in GigaCloud Technology's long position.| Cloudflare vs. GigaCloud Technology Class | Cloudflare vs. Arqit Quantum | Cloudflare vs. Telos Corp | Cloudflare vs. Cemtrex |
| GigaCloud Technology vs. Steven Madden | GigaCloud Technology vs. Vera Bradley | GigaCloud Technology vs. Caleres | GigaCloud Technology vs. Rocky Brands |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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