Correlation Between Guidewire Software and COFCO Joycome

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

By analyzing existing cross correlation between Guidewire Software and COFCO Joycome Foods, you can compare the effects of market volatilities on Guidewire Software and COFCO Joycome 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 Guidewire Software with a short position of COFCO Joycome. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidewire Software and COFCO Joycome.

Diversification Opportunities for Guidewire Software and COFCO Joycome

-0.41

Correlation Coefficient

Guidewire Software  COFCO Joycome

Very good diversification

The 3 months correlation between Guidewire and COFCO is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Guidewire Software and COFCO Joycome Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COFCO Joycome Foods and Guidewire Software 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 Guidewire Software are associated (or correlated) with COFCO Joycome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COFCO Joycome Foods has no effect on the direction of Guidewire Software i.e., Guidewire Software and COFCO Joycome go up and down completely randomly.

Pair Corralation between Guidewire Software and COFCO Joycome

Assuming the 90 days trading horizon Guidewire Software is expected to generate 0.85 times more return on investment than COFCO Joycome. However, Guidewire Software is 1.18 times less risky than COFCO Joycome. It trades about 0.02 of its potential returns per unit of risk. COFCO Joycome Foods is currently generating about 0.01 per unit of risk. If you would invest  16,500  in Guidewire Software on December 7, 2024 and sell it today you would earn a total of  230.00  from holding Guidewire Software or generate 1.39% return on investment over 90 days.

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

Guidewire Software  vs.  COFCO Joycome Foods

Guidewire Software

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Guidewire Software are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Guidewire Software is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

COFCO Joycome Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days COFCO Joycome Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, COFCO Joycome is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Guidewire Software and COFCO Joycome

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

The idea behind Guidewire Software and COFCO Joycome Foods 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.