Correlation Between GBS Software and WOOLWORTHS HDGS
Can any of the company-specific risk be diversified away by investing in both GBS Software and WOOLWORTHS HDGS 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 WOOLWORTHS HDGS 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 WOOLWORTHS HDGS GDR, you can compare the effects of market volatilities on GBS Software and WOOLWORTHS HDGS 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 WOOLWORTHS HDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of GBS Software and WOOLWORTHS HDGS.
Diversification Opportunities for GBS Software and WOOLWORTHS HDGS
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between GBS and WOOLWORTHS is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding GBS Software AG and WOOLWORTHS HDGS GDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WOOLWORTHS HDGS GDR 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 WOOLWORTHS HDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WOOLWORTHS HDGS GDR has no effect on the direction of GBS Software i.e., GBS Software and WOOLWORTHS HDGS go up and down completely randomly.
Pair Corralation between GBS Software and WOOLWORTHS HDGS
Assuming the 90 days trading horizon GBS Software AG is expected to generate 0.98 times more return on investment than WOOLWORTHS HDGS. However, GBS Software AG is 1.02 times less risky than WOOLWORTHS HDGS. It trades about 0.03 of its potential returns per unit of risk. WOOLWORTHS HDGS GDR is currently generating about -0.14 per unit of risk. 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 Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
GBS Software AG vs. WOOLWORTHS HDGS GDR
Performance |
Timeline |
GBS Software AG |
WOOLWORTHS HDGS GDR |
GBS Software and WOOLWORTHS HDGS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GBS Software and WOOLWORTHS HDGS
The main advantage of trading using opposite GBS Software and WOOLWORTHS HDGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GBS Software position performs unexpectedly, WOOLWORTHS HDGS 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 WOOLWORTHS HDGS will offset losses from the drop in WOOLWORTHS HDGS's long position.GBS Software vs. Japan Post Insurance | GBS Software vs. Selective Insurance Group | GBS Software vs. Jacquet Metal Service | GBS Software vs. Ping An Insurance |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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