Correlation Between MEDICAL FACILITIES and GBS Software

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

By analyzing existing cross correlation between MEDICAL FACILITIES NEW and GBS Software AG, you can compare the effects of market volatilities on MEDICAL FACILITIES and GBS Software 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 MEDICAL FACILITIES with a short position of GBS Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEDICAL FACILITIES and GBS Software.

Diversification Opportunities for MEDICAL FACILITIES and GBS Software

0.2

Correlation Coefficient

MEDICAL FACILITIES  GBS Software

Modest diversification

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

Pair Corralation between MEDICAL FACILITIES and GBS Software

Assuming the 90 days horizon MEDICAL FACILITIES NEW is expected to under-perform the GBS Software. But the stock apears to be less risky and, when comparing its historical volatility, MEDICAL FACILITIES NEW is 1.76 times less risky than GBS Software. The stock trades about -0.03 of its potential returns per unit of risk. The GBS Software AG is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  260.00  in GBS Software AG on October 11, 2024 and sell it today you would earn a total of  38.00  from holding GBS Software AG or generate 14.62% return on investment over 90 days.

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

MEDICAL FACILITIES NEW  vs.  GBS Software AG

MEDICAL FACILITIES NEW

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MEDICAL FACILITIES NEW are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MEDICAL FACILITIES may actually be approaching a critical reversion point that can send shares even higher in February 2025.

GBS Software AG

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GBS Software AG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, GBS Software unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MEDICAL FACILITIES and GBS Software

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

The idea behind MEDICAL FACILITIES NEW and GBS Software 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.