Correlation Between Datang International and Guidewire Software
Can any of the company-specific risk be diversified away by investing in both Datang International 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 Datang International and Guidewire Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Datang International Power and Guidewire Software, you can compare the effects of market volatilities on Datang International 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 Datang International with a short position of Guidewire Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datang International and Guidewire Software.
Diversification Opportunities for Datang International and Guidewire Software
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Datang and Guidewire is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Datang International Power and Guidewire Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidewire Software and Datang International 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 Datang International Power 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 Datang International i.e., Datang International and Guidewire Software go up and down completely randomly.
Pair Corralation between Datang International and Guidewire Software
Assuming the 90 days horizon Datang International Power is expected to generate 0.77 times more return on investment than Guidewire Software. However, Datang International Power is 1.29 times less risky than Guidewire Software. It trades about 0.1 of its potential returns per unit of risk. Guidewire Software is currently generating about -0.14 per unit of risk. If you would invest 17.00 in Datang International Power on September 22, 2024 and sell it today you would earn a total of 1.00 from holding Datang International Power or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Datang International Power vs. Guidewire Software
Performance |
| Timeline |
| Datang International |
| Guidewire Software |
Datang International and Guidewire Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Datang International and Guidewire Software
The main advantage of trading using opposite Datang International and Guidewire Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Datang International 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.| Datang International vs. CN YANGTPWR GDR | Datang International vs. SIEMENS ENERGY AG | Datang International vs. Siemens Energy AG | Datang International vs. Vistra Corp |
| Guidewire Software vs. TERADATA | Guidewire Software vs. DATAGROUP SE | Guidewire Software vs. Datang International Power | Guidewire Software vs. EBRO FOODS |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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