Correlation Between Guidewire Software and CITIC Telecom
Can any of the company-specific risk be diversified away by investing in both Guidewire Software and CITIC Telecom 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 Guidewire Software and CITIC Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guidewire Software and CITIC Telecom International, you can compare the effects of market volatilities on Guidewire Software and CITIC Telecom 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 Guidewire Software with a short position of CITIC Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidewire Software and CITIC Telecom.
Diversification Opportunities for Guidewire Software and CITIC Telecom
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Guidewire and CITIC is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Guidewire Software and CITIC Telecom International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Telecom Intern and Guidewire 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 Guidewire Software are associated (or correlated) with CITIC Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC Telecom Intern has no effect on the direction of Guidewire Software i.e., Guidewire Software and CITIC Telecom go up and down completely randomly.
Pair Corralation between Guidewire Software and CITIC Telecom
Assuming the 90 days trading horizon Guidewire Software is expected to under-perform the CITIC Telecom. In addition to that, Guidewire Software is 1.12 times more volatile than CITIC Telecom International. It trades about -0.12 of its total potential returns per unit of risk. CITIC Telecom International is currently generating about 0.07 per unit of volatility. If you would invest 26.00 in CITIC Telecom International on September 15, 2024 and sell it today you would earn a total of 1.00 from holding CITIC Telecom International or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guidewire Software vs. CITIC Telecom International
Performance |
| Timeline |
| Guidewire Software |
| CITIC Telecom Intern |
Guidewire Software and CITIC Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guidewire Software and CITIC Telecom
The main advantage of trading using opposite Guidewire Software and CITIC Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidewire Software position performs unexpectedly, CITIC Telecom 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 CITIC Telecom will offset losses from the drop in CITIC Telecom's long position.| Guidewire Software vs. Apple Inc | Guidewire Software vs. Apple Inc | Guidewire Software vs. Apple Inc | Guidewire Software vs. Apple Inc |
| CITIC Telecom vs. Alfa Financial Software | CITIC Telecom vs. UPDATE SOFTWARE | CITIC Telecom vs. Guidewire Software | CITIC Telecom vs. Playtech plc |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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