Correlation Between Guidewire Software and TELES Informationstech

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

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

Diversification Opportunities for Guidewire Software and TELES Informationstech

-0.6

Correlation Coefficient

Guidewire Software  TELES Informationstech

Excellent diversification

The 3 months correlation between Guidewire and TELES is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Guidewire Software and TELES Informationstechnologien in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TELES Informationstech 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 TELES Informationstech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TELES Informationstech has no effect on the direction of Guidewire Software i.e., Guidewire Software and TELES Informationstech go up and down completely randomly.

Pair Corralation between Guidewire Software and TELES Informationstech

Assuming the 90 days trading horizon Guidewire Software is expected to generate 0.51 times more return on investment than TELES Informationstech. However, Guidewire Software is 1.95 times less risky than TELES Informationstech. It trades about 0.06 of its potential returns per unit of risk. TELES Informationstechnologien AG is currently generating about -0.06 per unit of risk. If you would invest  16,290  in Guidewire Software on December 29, 2024 and sell it today you would earn a total of  1,210  from holding Guidewire Software or generate 7.43% return on investment over 90 days.

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

Guidewire Software  vs.  TELES Informationstechnologien

Guidewire Software

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guidewire Software are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Guidewire Software may actually be approaching a critical reversion point that can send shares even higher in April 2025.

TELES Informationstech

Risk-Adjusted Performance

Very Weak

Over the last 90 days TELES Informationstechnologien AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward-looking signals remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Guidewire Software and TELES Informationstech

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

The idea behind Guidewire Software and TELES Informationstechnologien AG 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.