Correlation Between Gigabyte Technology and FocalTech Systems

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

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

Diversification Opportunities for Gigabyte Technology and FocalTech Systems

0.68

Correlation Coefficient

Gigabyte Technology  FocalTech Systems

Poor diversification

The 3 months correlation between Gigabyte and FocalTech is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Gigabyte Technology Co and FocalTech Systems Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FocalTech Systems and Gigabyte 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 Gigabyte Technology Co are associated (or correlated) with FocalTech Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FocalTech Systems has no effect on the direction of Gigabyte Technology i.e., Gigabyte Technology and FocalTech Systems go up and down completely randomly.

Pair Corralation between Gigabyte Technology and FocalTech Systems

Assuming the 90 days trading horizon Gigabyte Technology Co is expected to generate 0.97 times more return on investment than FocalTech Systems. However, Gigabyte Technology Co is 1.03 times less risky than FocalTech Systems. It trades about -0.06 of its potential returns per unit of risk. FocalTech Systems Co is currently generating about -0.11 per unit of risk. If you would invest  28,200  in Gigabyte Technology Co on December 4, 2024 and sell it today you would lose (2,300) from holding Gigabyte Technology Co or give up 8.16% of portfolio value over 90 days.

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

Gigabyte Technology Co  vs.  FocalTech Systems Co

Gigabyte Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gigabyte Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

FocalTech Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days FocalTech Systems Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Gigabyte Technology and FocalTech Systems

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

The idea behind Gigabyte Technology Co and FocalTech Systems Co 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.