Correlation Between Toast and GigaCloud Technology
Can any of the company-specific risk be diversified away by investing in both Toast 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 Toast and GigaCloud Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Toast Inc and GigaCloud Technology Class, you can compare the effects of market volatilities on Toast 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 Toast with a short position of GigaCloud Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toast and GigaCloud Technology.
Diversification Opportunities for Toast and GigaCloud Technology
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Toast and GigaCloud is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Toast 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 Toast 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 Toast 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 Toast i.e., Toast and GigaCloud Technology go up and down completely randomly.
Pair Corralation between Toast and GigaCloud Technology
Given the investment horizon of 90 days Toast is expected to generate 2.95 times less return on investment than GigaCloud Technology. But when comparing it to its historical volatility, Toast Inc is 1.65 times less risky than GigaCloud Technology. It trades about 0.12 of its potential returns per unit of risk. GigaCloud Technology Class is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,818 in GigaCloud Technology Class on October 24, 2024 and sell it today you would earn a total of 274.00 from holding GigaCloud Technology Class or generate 15.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Toast Inc vs. GigaCloud Technology Class
Performance |
| Timeline |
| Toast Inc |
| GigaCloud Technology |
Toast and GigaCloud Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toast and GigaCloud Technology
The main advantage of trading using opposite Toast and GigaCloud Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toast 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.The idea behind Toast Inc and GigaCloud Technology Class 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.| 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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