Correlation Between Veeco Instruments and Giga Tronics

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

By analyzing existing cross correlation between Veeco Instruments and Giga tronics, you can compare the effects of market volatilities on Veeco Instruments and Giga Tronics 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 Veeco Instruments with a short position of Giga Tronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veeco Instruments and Giga Tronics.

Diversification Opportunities for Veeco Instruments and Giga Tronics

0.51

Correlation Coefficient

Veeco Instruments  Giga Tronics

Very weak diversification

The 3 months correlation between Veeco and Giga is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Veeco Instruments and Giga tronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Giga tronics and Veeco Instruments 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 Veeco Instruments are associated (or correlated) with Giga Tronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Giga tronics has no effect on the direction of Veeco Instruments i.e., Veeco Instruments and Giga Tronics go up and down completely randomly.

Pair Corralation between Veeco Instruments and Giga Tronics

Given the investment horizon of 90 days Veeco Instruments is expected to under-perform the Giga Tronics. But the stock apears to be less risky and, when comparing its historical volatility, Veeco Instruments is 9.62 times less risky than Giga Tronics. The stock trades about -0.06 of its potential returns per unit of risk. The Giga tronics is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Giga tronics on September 3, 2024 and sell it today you would lose (5.22) from holding Giga tronics or give up 87.0% of portfolio value over 90 days.

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

Veeco Instruments  vs.  Giga tronics

Veeco Instruments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Veeco Instruments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Giga tronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Giga tronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Giga Tronics is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Veeco Instruments and Giga Tronics

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

The idea behind Veeco Instruments and Giga tronics 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.