Correlation Between New Oriental and Guidewire Software,

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Can any of the company-specific risk be diversified away by investing in both New Oriental and Guidewire 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 New Oriental and Guidewire Software, into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Oriental Education and Guidewire Software,, you can compare the effects of market volatilities on New Oriental and Guidewire 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 New Oriental with a short position of Guidewire Software,. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Oriental and Guidewire Software,.

Diversification Opportunities for New Oriental and Guidewire Software,

-0.51
  Correlation Coefficient

Excellent diversification

The 3 months correlation between New and Guidewire is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding New Oriental Education and Guidewire Software, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidewire Software, and New Oriental 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 New Oriental Education are associated (or correlated) with Guidewire Software,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidewire Software, has no effect on the direction of New Oriental i.e., New Oriental and Guidewire Software, go up and down completely randomly.

Pair Corralation between New Oriental and Guidewire Software,

Assuming the 90 days trading horizon New Oriental Education is expected to under-perform the Guidewire Software,. In addition to that, New Oriental is 1.48 times more volatile than Guidewire Software,. It trades about -0.05 of its total potential returns per unit of risk. Guidewire Software, is currently generating about 0.04 per unit of volatility. If you would invest  8,424  in Guidewire Software, on October 7, 2024 and sell it today you would earn a total of  264.00  from holding Guidewire Software, or generate 3.13% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy96.67%
ValuesDaily Returns

New Oriental Education  vs.  Guidewire Software,

 Performance 
       Timeline  
New Oriental Education 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days New Oriental Education has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
Guidewire Software, 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
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. Despite somewhat strong basic indicators, Guidewire Software, is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

New Oriental and Guidewire Software, Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with New Oriental and Guidewire Software,

The main advantage of trading using opposite New Oriental and Guidewire Software, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Oriental position performs unexpectedly, Guidewire 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 Guidewire Software, will offset losses from the drop in Guidewire Software,'s long position.
The idea behind New Oriental Education and Guidewire Software, 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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