Correlation Between Gold Road and GBS Software
Can any of the company-specific risk be diversified away by investing in both Gold Road and GBS 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 Gold Road and GBS Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Road Resources and GBS Software AG, you can compare the effects of market volatilities on Gold Road and GBS 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 Gold Road with a short position of GBS Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and GBS Software.
Diversification Opportunities for Gold Road and GBS Software
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gold and GBS is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and GBS Software AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GBS Software AG and Gold Road 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 Gold Road Resources are associated (or correlated) with GBS Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GBS Software AG has no effect on the direction of Gold Road i.e., Gold Road and GBS Software go up and down completely randomly.
Pair Corralation between Gold Road and GBS Software
Assuming the 90 days horizon Gold Road Resources is expected to generate 0.43 times more return on investment than GBS Software. However, Gold Road Resources is 2.32 times less risky than GBS Software. It trades about 1.07 of its potential returns per unit of risk. GBS Software AG is currently generating about 0.43 per unit of risk. If you would invest 120.00 in Gold Road Resources on October 24, 2024 and sell it today you would earn a total of 26.00 from holding Gold Road Resources or generate 21.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Road Resources vs. GBS Software AG
Performance |
| Timeline |
| Gold Road Resources |
| GBS Software AG |
Gold Road and GBS Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Road and GBS Software
The main advantage of trading using opposite Gold Road and GBS Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Road position performs unexpectedly, GBS 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 GBS Software will offset losses from the drop in GBS Software's long position.| Gold Road vs. CREO MEDICAL GRP | Gold Road vs. Apollo Medical Holdings | Gold Road vs. IERVOLINO ENTERTAINMENT | Gold Road vs. Universal Entertainment |
| GBS Software vs. Air Transport Services | GBS Software vs. EVS Broadcast Equipment | GBS Software vs. Gold Road Resources | GBS Software vs. IMAGIN MEDICAL INC |
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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