Correlation Between SentinelOne and GigaCloud Technology

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

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

Diversification Opportunities for SentinelOne and GigaCloud Technology

0.54

Correlation Coefficient

SentinelOne  GigaCloud Technology

Very weak diversification

The 3 months correlation between SentinelOne and GigaCloud is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and GigaCloud Technology Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaCloud Technology and SentinelOne 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 SentinelOne 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 SentinelOne i.e., SentinelOne and GigaCloud Technology go up and down completely randomly.

Pair Corralation between SentinelOne and GigaCloud Technology

Taking into account the 90-day investment horizon SentinelOne is expected to generate 1.12 times less return on investment than GigaCloud Technology. But when comparing it to its historical volatility, SentinelOne is 2.35 times less risky than GigaCloud Technology. It trades about 0.12 of its potential returns per unit of risk. GigaCloud Technology Class is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,105  in GigaCloud Technology Class on September 3, 2024 and sell it today you would earn a total of  259.00  from holding GigaCloud Technology Class or generate 12.3% return on investment over 90 days.

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

SentinelOne  vs.  GigaCloud Technology Class

SentinelOne

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SentinelOne are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, SentinelOne unveiled solid returns over the last few months and may actually be approaching a breakup point.

GigaCloud Technology

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GigaCloud Technology Class are ranked lower than 4 (%) 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.

Pair Trading with SentinelOne and GigaCloud Technology

The main advantage of trading using opposite SentinelOne and GigaCloud Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SentinelOne 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 SentinelOne 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.

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.