Correlation Between Telos Corp and GigaCloud Technology

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

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

Diversification Opportunities for Telos Corp and GigaCloud Technology

0.31

Correlation Coefficient

Telos Corp  GigaCloud Technology

Weak diversification

The 3 months correlation between Telos and GigaCloud is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Telos Corp and GigaCloud Technology Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaCloud Technology and Telos Corp 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 Telos Corp 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 Telos Corp i.e., Telos Corp and GigaCloud Technology go up and down completely randomly.

Pair Corralation between Telos Corp and GigaCloud Technology

Considering the 90-day investment horizon Telos Corp is expected to generate 30.06 times less return on investment than GigaCloud Technology. But when comparing it to its historical volatility, Telos Corp is 1.59 times less risky than GigaCloud Technology. It trades about 0.0 of its potential returns per unit of risk. GigaCloud Technology Class is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,105  in GigaCloud Technology Class on September 1, 2024 and sell it today you would earn a total of  365.00  from holding GigaCloud Technology Class or generate 17.34% return on investment over 90 days.

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

Telos Corp  vs.  GigaCloud Technology Class

Telos Corp

Risk-Adjusted Performance

0 of 100

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 comparatively stable essential indicators, Telos Corp is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

GigaCloud Technology

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GigaCloud Technology Class are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating fundamental indicators, GigaCloud Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telos Corp and GigaCloud Technology

The main advantage of trading using opposite Telos Corp and GigaCloud Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telos Corp 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 Telos Corp 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.