Correlation Between Guidewire Software and Yanzhou Coal
Can any of the company-specific risk be diversified away by investing in both Guidewire Software and Yanzhou Coal 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 Yanzhou Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guidewire Software and Yanzhou Coal Mining, you can compare the effects of market volatilities on Guidewire Software and Yanzhou Coal 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 Yanzhou Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidewire Software and Yanzhou Coal.
Diversification Opportunities for Guidewire Software and Yanzhou Coal
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Guidewire and Yanzhou is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Guidewire Software and Yanzhou Coal Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yanzhou Coal Mining 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 Yanzhou Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yanzhou Coal Mining has no effect on the direction of Guidewire Software i.e., Guidewire Software and Yanzhou Coal go up and down completely randomly.
Pair Corralation between Guidewire Software and Yanzhou Coal
Assuming the 90 days trading horizon Guidewire Software is expected to generate 0.65 times more return on investment than Yanzhou Coal. However, Guidewire Software is 1.53 times less risky than Yanzhou Coal. It trades about 0.08 of its potential returns per unit of risk. Yanzhou Coal Mining is currently generating about -0.37 per unit of risk. If you would invest 16,295 in Guidewire Software on October 17, 2024 and sell it today you would earn a total of 315.00 from holding Guidewire Software or generate 1.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Guidewire Software vs. Yanzhou Coal Mining
Performance |
| Timeline |
| Guidewire Software |
| Yanzhou Coal Mining |
Guidewire Software and Yanzhou Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guidewire Software and Yanzhou Coal
The main advantage of trading using opposite Guidewire Software and Yanzhou Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidewire Software position performs unexpectedly, Yanzhou Coal 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 Yanzhou Coal will offset losses from the drop in Yanzhou Coal's long position.| Guidewire Software vs. Align Technology | Guidewire Software vs. X FAB Silicon Foundries | Guidewire Software vs. MACOM Technology Solutions | Guidewire Software vs. MagnaChip Semiconductor Corp |
| Yanzhou Coal vs. Kingdee International Software | Yanzhou Coal vs. Guidewire Software | Yanzhou Coal vs. American Airlines Group | Yanzhou Coal vs. ASURE SOFTWARE |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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