Correlation Between Wenzhou Kangning and GBS Software

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

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

Diversification Opportunities for Wenzhou Kangning and GBS Software

0.29

Correlation Coefficient

Wenzhou Kangning  GBS Software

Modest diversification

The 3 months correlation between Wenzhou and GBS is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Wenzhou Kangning Hospital 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 Wenzhou Kangning 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 Wenzhou Kangning Hospital 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 Wenzhou Kangning i.e., Wenzhou Kangning and GBS Software go up and down completely randomly.

Pair Corralation between Wenzhou Kangning and GBS Software

Assuming the 90 days trading horizon Wenzhou Kangning Hospital is expected to under-perform the GBS Software. In addition to that, Wenzhou Kangning is 1.32 times more volatile than GBS Software AG. It trades about -0.24 of its total potential returns per unit of risk. GBS Software AG is currently generating about 0.03 per unit of volatility. If you would invest  262.00  in GBS Software AG on December 22, 2024 and sell it today you would earn a total of  8.00  from holding GBS Software AG or generate 3.05% return on investment over 90 days.

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

Wenzhou Kangning Hospital  vs.  GBS Software AG

Wenzhou Kangning Hospital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wenzhou Kangning Hospital 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 basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

GBS Software AG

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GBS Software AG are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, GBS Software is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Wenzhou Kangning and GBS Software

The main advantage of trading using opposite Wenzhou Kangning and GBS Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wenzhou Kangning 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 Wenzhou Kangning Hospital 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.

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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.