Correlation Between GigaCloud Technology and Palantir Technologies

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

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

Diversification Opportunities for GigaCloud Technology and Palantir Technologies

0.01

Correlation Coefficient

GigaCloud Technology  Palantir Technologies

Significant diversification

The 3 months correlation between GigaCloud and Palantir is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding GigaCloud Technology Class and Palantir Technologies Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palantir Technologies and GigaCloud 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 GigaCloud Technology Class are associated (or correlated) with Palantir Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palantir Technologies has no effect on the direction of GigaCloud Technology i.e., GigaCloud Technology and Palantir Technologies go up and down completely randomly.

Pair Corralation between GigaCloud Technology and Palantir Technologies

Considering the 90-day investment horizon GigaCloud Technology is expected to generate 1.32 times less return on investment than Palantir Technologies. In addition to that, GigaCloud Technology is 1.43 times more volatile than Palantir Technologies Class. It trades about 0.07 of its total potential returns per unit of risk. Palantir Technologies Class is currently generating about 0.14 per unit of volatility. If you would invest  640.00  in Palantir Technologies Class on September 19, 2024 and sell it today you would earn a total of  6,511  from holding Palantir Technologies Class or generate 1017.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

GigaCloud Technology Class  vs.  Palantir Technologies Class

GigaCloud Technology

Risk-Adjusted Performance

0 of 100

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 comparatively stable fundamental indicators, GigaCloud Technology is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Palantir Technologies

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Palantir Technologies Class are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Palantir Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GigaCloud Technology and Palantir Technologies

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

The idea behind GigaCloud Technology Class and Palantir Technologies 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.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.