Correlation Between Caixabank and Gigas Hosting

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

By analyzing existing cross correlation between Caixabank SA and Gigas Hosting SA, you can compare the effects of market volatilities on Caixabank and Gigas Hosting 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 Caixabank with a short position of Gigas Hosting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caixabank and Gigas Hosting.

Diversification Opportunities for Caixabank and Gigas Hosting

-0.59

Correlation Coefficient

Caixabank  Gigas Hosting

Excellent diversification

The 3 months correlation between Caixabank and Gigas is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Caixabank SA and Gigas Hosting SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gigas Hosting SA and Caixabank 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 Caixabank SA are associated (or correlated) with Gigas Hosting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gigas Hosting SA has no effect on the direction of Caixabank i.e., Caixabank and Gigas Hosting go up and down completely randomly.

Pair Corralation between Caixabank and Gigas Hosting

Assuming the 90 days trading horizon Caixabank SA is expected to generate 0.75 times more return on investment than Gigas Hosting. However, Caixabank SA is 1.33 times less risky than Gigas Hosting. It trades about 0.34 of its potential returns per unit of risk. Gigas Hosting SA is currently generating about -0.12 per unit of risk. If you would invest  514.00  in Caixabank SA on December 24, 2024 and sell it today you would earn a total of  216.00  from holding Caixabank SA or generate 42.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Caixabank SA  vs.  Gigas Hosting SA

Caixabank SA

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Caixabank SA are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Caixabank exhibited solid returns over the last few months and may actually be approaching a breakup point.

Gigas Hosting SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gigas Hosting SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Caixabank and Gigas Hosting

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

The idea behind Caixabank SA and Gigas Hosting SA 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.