Correlation Between Guidewire Software and SHIN ETSU

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

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

Diversification Opportunities for Guidewire Software and SHIN ETSU

-0.14

Correlation Coefficient

Guidewire Software  SHIN ETSU

Good diversification

The 3 months correlation between Guidewire and SHIN is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Guidewire Software and SHIN ETSU CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIN ETSU CHEMICAL 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 SHIN ETSU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHIN ETSU CHEMICAL has no effect on the direction of Guidewire Software i.e., Guidewire Software and SHIN ETSU go up and down completely randomly.

Pair Corralation between Guidewire Software and SHIN ETSU

Assuming the 90 days trading horizon Guidewire Software is expected to under-perform the SHIN ETSU. In addition to that, Guidewire Software is 2.09 times more volatile than SHIN ETSU CHEMICAL. It trades about -0.16 of its total potential returns per unit of risk. SHIN ETSU CHEMICAL is currently generating about -0.22 per unit of volatility. If you would invest  3,484  in SHIN ETSU CHEMICAL on October 1, 2024 and sell it today you would lose (283.00) from holding SHIN ETSU CHEMICAL or give up 8.12% of portfolio value over 90 days.

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

Guidewire Software  vs.  SHIN ETSU CHEMICAL

Guidewire Software

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guidewire Software are ranked lower than 2 (%) 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 current stock price uproar, may contribute to short-horizon losses for the private investors.

SHIN ETSU CHEMICAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SHIN ETSU CHEMICAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Guidewire Software and SHIN ETSU

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

The idea behind Guidewire Software and SHIN ETSU CHEMICAL 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.