Correlation Between Stem and GigaCloud Technology
Can any of the company-specific risk be diversified away by investing in both Stem 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 Stem and GigaCloud Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stem Inc and GigaCloud Technology Class, you can compare the effects of market volatilities on Stem 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 Stem with a short position of GigaCloud Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stem and GigaCloud Technology.
Diversification Opportunities for Stem and GigaCloud Technology
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Stem and GigaCloud is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Stem Inc and GigaCloud Technology Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaCloud Technology and Stem 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 Stem Inc 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 Stem i.e., Stem and GigaCloud Technology go up and down completely randomly.
Pair Corralation between Stem and GigaCloud Technology
Given the investment horizon of 90 days Stem Inc is expected to under-perform the GigaCloud Technology. In addition to that, Stem is 4.12 times more volatile than GigaCloud Technology Class. It trades about -0.01 of its total potential returns per unit of risk. GigaCloud Technology Class is currently generating about 0.16 per unit of volatility. If you would invest 1,906 in GigaCloud Technology Class on November 3, 2024 and sell it today you would earn a total of 229.00 from holding GigaCloud Technology Class or generate 12.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stem Inc vs. GigaCloud Technology Class
Performance |
| Timeline |
| Stem Inc |
| GigaCloud Technology |
Stem and GigaCloud Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stem and GigaCloud Technology
The main advantage of trading using opposite Stem and GigaCloud Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stem 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.| Stem vs. Palo Alto Networks | Stem vs. Crowdstrike Holdings | Stem vs. Cloudflare | Stem vs. Palantir Technologies Class |
| GigaCloud Technology vs. Arqit Quantum | GigaCloud Technology vs. Telos Corp | GigaCloud Technology vs. Cemtrex | GigaCloud Technology vs. Alarum 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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