Correlation Between Easy Software and GOLD ROAD
Can any of the company-specific risk be diversified away by investing in both Easy Software and GOLD ROAD 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 Easy Software and GOLD ROAD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Easy Software AG and GOLD ROAD RES, you can compare the effects of market volatilities on Easy Software and GOLD ROAD 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 Easy Software with a short position of GOLD ROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Easy Software and GOLD ROAD.
Diversification Opportunities for Easy Software and GOLD ROAD
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Easy and GOLD is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Easy Software AG and GOLD ROAD RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOLD ROAD RES and Easy 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 Easy Software AG are associated (or correlated) with GOLD ROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOLD ROAD RES has no effect on the direction of Easy Software i.e., Easy Software and GOLD ROAD go up and down completely randomly.
Pair Corralation between Easy Software and GOLD ROAD
Assuming the 90 days trading horizon Easy Software is expected to generate 1.14 times less return on investment than GOLD ROAD. But when comparing it to its historical volatility, Easy Software AG is 1.12 times less risky than GOLD ROAD. It trades about 0.03 of its potential returns per unit of risk. GOLD ROAD RES is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 107.00 in GOLD ROAD RES on October 13, 2024 and sell it today you would earn a total of 22.00 from holding GOLD ROAD RES or generate 20.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Easy Software AG vs. GOLD ROAD RES
Performance |
| Timeline |
| Easy Software AG |
| GOLD ROAD RES |
Easy Software and GOLD ROAD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Easy Software and GOLD ROAD
The main advantage of trading using opposite Easy Software and GOLD ROAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Easy Software position performs unexpectedly, GOLD ROAD 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 GOLD ROAD will offset losses from the drop in GOLD ROAD's long position.| Easy Software vs. Salesforce | Easy Software vs. Peijia Medical Limited | Easy Software vs. TRADELINK ELECTRON | Easy Software vs. Advanced Medical Solutions |
| GOLD ROAD vs. TRADELINK ELECTRON | GOLD ROAD vs. Easy Software AG | GOLD ROAD vs. H2O Retailing | GOLD ROAD vs. AAC TECHNOLOGHLDGADR |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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