Correlation Between GigaCloud Technology and Verint Systems

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

Diversification Opportunities for GigaCloud Technology and Verint Systems

-0.55

Correlation Coefficient

GigaCloud Technology  Verint Systems

Excellent diversification

The 3 months correlation between GigaCloud and Verint is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding GigaCloud Technology Class and Verint Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verint Systems 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 Verint Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verint Systems has no effect on the direction of GigaCloud Technology i.e., GigaCloud Technology and Verint Systems go up and down completely randomly.

Pair Corralation between GigaCloud Technology and Verint Systems

Considering the 90-day investment horizon GigaCloud Technology Class is expected to generate 2.42 times more return on investment than Verint Systems. However, GigaCloud Technology is 2.42 times more volatile than Verint Systems. It trades about 0.07 of its potential returns per unit of risk. Verint Systems is currently generating about -0.1 per unit of risk. 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 Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

GigaCloud Technology Class  vs.  Verint Systems

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.

Verint Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Verint Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with GigaCloud Technology and Verint Systems

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

The idea behind GigaCloud Technology Class and Verint Systems 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.