Correlation Between GigaCloud Technology and Telos Corp

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

Diversification Opportunities for GigaCloud Technology and Telos Corp

0.77

Correlation Coefficient

GigaCloud Technology  Telos Corp

Poor diversification

The 3 months correlation between GigaCloud and Telos is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding GigaCloud Technology Class and Telos Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telos Corp 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 Telos Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telos Corp has no effect on the direction of GigaCloud Technology i.e., GigaCloud Technology and Telos Corp go up and down completely randomly.

Pair Corralation between GigaCloud Technology and Telos Corp

Considering the 90-day investment horizon GigaCloud Technology Class is expected to generate 1.08 times more return on investment than Telos Corp. However, GigaCloud Technology is 1.08 times more volatile than Telos Corp. It trades about -0.04 of its potential returns per unit of risk. Telos Corp is currently generating about -0.13 per unit of risk. If you would invest  1,717  in GigaCloud Technology Class on December 29, 2024 and sell it today you would lose (206.00) from holding GigaCloud Technology Class or give up 12.0% of portfolio value over 90 days.

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

GigaCloud Technology Class  vs.  Telos Corp

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.

Telos Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Telos Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with GigaCloud Technology and Telos Corp

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

The idea behind GigaCloud Technology Class and Telos Corp 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.