Correlation Between GBS Software and Alfa Financial
Can any of the company-specific risk be diversified away by investing in both GBS Software and Alfa Financial 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 GBS Software and Alfa Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GBS Software AG and Alfa Financial Software, you can compare the effects of market volatilities on GBS Software and Alfa Financial 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 GBS Software with a short position of Alfa Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of GBS Software and Alfa Financial.
Diversification Opportunities for GBS Software and Alfa Financial
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GBS and Alfa is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding GBS Software AG and Alfa Financial Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Financial Software and GBS 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 GBS Software AG are associated (or correlated) with Alfa Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Financial Software has no effect on the direction of GBS Software i.e., GBS Software and Alfa Financial go up and down completely randomly.
Pair Corralation between GBS Software and Alfa Financial
Assuming the 90 days trading horizon GBS Software AG is expected to generate 1.73 times more return on investment than Alfa Financial. However, GBS Software is 1.73 times more volatile than Alfa Financial Software. It trades about 0.21 of its potential returns per unit of risk. Alfa Financial Software is currently generating about -0.25 per unit of risk. If you would invest 276.00 in GBS Software AG on October 30, 2024 and sell it today you would earn a total of 26.00 from holding GBS Software AG or generate 9.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GBS Software AG vs. Alfa Financial Software
Performance |
| Timeline |
| GBS Software AG |
| Alfa Financial Software |
GBS Software and Alfa Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GBS Software and Alfa Financial
The main advantage of trading using opposite GBS Software and Alfa Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GBS Software position performs unexpectedly, Alfa Financial 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 Alfa Financial will offset losses from the drop in Alfa Financial's long position.| GBS Software vs. EVS Broadcast Equipment | GBS Software vs. Elmos Semiconductor SE | GBS Software vs. Nordic Semiconductor ASA | GBS Software vs. Transport International Holdings |
| Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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