Correlation Between GBS Software and Anfield Resources

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

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

Diversification Opportunities for GBS Software and Anfield Resources

-0.43

Correlation Coefficient

GBS Software  Anfield Resources

Very good diversification

The 3 months correlation between GBS and Anfield is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding GBS Software AG and Anfield Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anfield Resources and GBS 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 GBS Software AG are associated (or correlated) with Anfield Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anfield Resources has no effect on the direction of GBS Software i.e., GBS Software and Anfield Resources go up and down completely randomly.

Pair Corralation between GBS Software and Anfield Resources

Assuming the 90 days trading horizon GBS Software is expected to generate 11.03 times less return on investment than Anfield Resources. But when comparing it to its historical volatility, GBS Software AG is 6.01 times less risky than Anfield Resources. It trades about 0.03 of its potential returns per unit of risk. Anfield Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  5.50  in Anfield Resources on October 4, 2024 and sell it today you would lose (0.75) from holding Anfield Resources or give up 13.64% of portfolio value over 90 days.

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

GBS Software AG  vs.  Anfield Resources

GBS Software AG

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GBS Software AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, GBS Software may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Anfield Resources

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Anfield Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Anfield Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GBS Software and Anfield Resources

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

The idea behind GBS Software AG and Anfield Resources 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.