Correlation Between Guidewire Software and HITACHI CONSTRMACHADR/2

Can any of the company-specific risk be diversified away by investing in both Guidewire Software and HITACHI CONSTRMACHADR/2 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 HITACHI CONSTRMACHADR/2 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guidewire Software and HITACHI STRMACHADR2, you can compare the effects of market volatilities on Guidewire Software and HITACHI CONSTRMACHADR/2 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 HITACHI CONSTRMACHADR/2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidewire Software and HITACHI CONSTRMACHADR/2.

Diversification Opportunities for Guidewire Software and HITACHI CONSTRMACHADR/2

-0.2

Correlation Coefficient

Guidewire Software  HITACHI CONSTRMACHADR/2

Good diversification

The 3 months correlation between Guidewire and HITACHI is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Guidewire Software and HITACHI STRMACHADR2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HITACHI CONSTRMACHADR/2 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 HITACHI CONSTRMACHADR/2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HITACHI CONSTRMACHADR/2 has no effect on the direction of Guidewire Software i.e., Guidewire Software and HITACHI CONSTRMACHADR/2 go up and down completely randomly.

Pair Corralation between Guidewire Software and HITACHI CONSTRMACHADR/2

Assuming the 90 days trading horizon Guidewire Software is expected to generate 0.91 times more return on investment than HITACHI CONSTRMACHADR/2. However, Guidewire Software is 1.09 times less risky than HITACHI CONSTRMACHADR/2. It trades about 0.1 of its potential returns per unit of risk. HITACHI STRMACHADR2 is currently generating about 0.02 per unit of risk. If you would invest  6,850  in Guidewire Software on October 23, 2024 and sell it today you would earn a total of  10,355  from holding Guidewire Software or generate 151.17% return on investment over 90 days.

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

Guidewire Software  vs.  HITACHI STRMACHADR2

Guidewire Software

Risk-Adjusted Performance

1 of 100

Weak

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.

HITACHI CONSTRMACHADR/2

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HITACHI STRMACHADR2 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, HITACHI CONSTRMACHADR/2 may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Guidewire Software and HITACHI CONSTRMACHADR/2

The main advantage of trading using opposite Guidewire Software and HITACHI CONSTRMACHADR/2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidewire Software position performs unexpectedly, HITACHI CONSTRMACHADR/2 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 HITACHI CONSTRMACHADR/2 will offset losses from the drop in HITACHI CONSTRMACHADR/2's long position.

The idea behind Guidewire Software and HITACHI STRMACHADR2 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.