Correlation Between Confluent and GigaCloud Technology

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

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

Diversification Opportunities for Confluent and GigaCloud Technology

0.51

Correlation Coefficient

Confluent  GigaCloud Technology

Very weak diversification

The 3 months correlation between Confluent and GigaCloud is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Confluent and GigaCloud Technology Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaCloud Technology and Confluent 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 Confluent 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 Confluent i.e., Confluent and GigaCloud Technology go up and down completely randomly.

Pair Corralation between Confluent and GigaCloud Technology

Given the investment horizon of 90 days Confluent is expected to generate 1.26 times more return on investment than GigaCloud Technology. However, Confluent is 1.26 times more volatile than GigaCloud Technology Class. It trades about -0.03 of its potential returns per unit of risk. GigaCloud Technology Class is currently generating about -0.04 per unit of risk. If you would invest  2,823  in Confluent on December 30, 2024 and sell it today you would lose (390.00) from holding Confluent or give up 13.82% of portfolio value over 90 days.

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

Confluent  vs.  GigaCloud Technology Class

Confluent

Risk-Adjusted Performance

Very Weak

Over the last 90 days Confluent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

GigaCloud Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days GigaCloud Technology Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Confluent and GigaCloud Technology

The main advantage of trading using opposite Confluent and GigaCloud Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Confluent 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 Confluent 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.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.