Correlation Between GigaCloud Technology and Splunk

Can any of the company-specific risk be diversified away by investing in both GigaCloud Technology and Splunk 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 Splunk 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 Splunk Inc, you can compare the effects of market volatilities on GigaCloud Technology and Splunk 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 Splunk. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigaCloud Technology and Splunk.

Diversification Opportunities for GigaCloud Technology and Splunk

0.76

Correlation Coefficient

GigaCloud Technology  Splunk

Poor diversification

The 3 months correlation between GigaCloud and Splunk is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding GigaCloud Technology Class and Splunk Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Splunk Inc 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 Splunk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Splunk Inc has no effect on the direction of GigaCloud Technology i.e., GigaCloud Technology and Splunk go up and down completely randomly.

Pair Corralation between GigaCloud Technology and Splunk

If you would invest  1,944  in GigaCloud Technology Class on August 30, 2024 and sell it today you would earn a total of  534.00  from holding GigaCloud Technology Class or generate 27.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

GigaCloud Technology Class  vs.  Splunk Inc

GigaCloud Technology

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GigaCloud Technology Class are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, GigaCloud Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Splunk Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Splunk Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Splunk is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with GigaCloud Technology and Splunk

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

The idea behind GigaCloud Technology Class and Splunk Inc 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.