Correlation Between GBS Software and Apple
Can any of the company-specific risk be diversified away by investing in both GBS Software and Apple 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 Apple 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 Apple Inc, you can compare the effects of market volatilities on GBS Software and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of GBS Software and Apple.
Diversification Opportunities for GBS Software and Apple
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between GBS and Apple is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding GBS Software AG and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of GBS Software i.e., GBS Software and Apple go up and down completely randomly.
Pair Corralation between GBS Software and Apple
Assuming the 90 days trading horizon GBS Software AG is expected to generate 1.26 times more return on investment than Apple. However, GBS Software is 1.26 times more volatile than Apple Inc. It trades about 0.04 of its potential returns per unit of risk. Apple Inc is currently generating about -0.04 per unit of risk. If you would invest 274.00 in GBS Software AG on November 4, 2024 and sell it today you would earn a total of 4.00 from holding GBS Software AG or generate 1.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GBS Software AG vs. Apple Inc
Performance |
| Timeline |
| GBS Software AG |
| Apple Inc |
GBS Software and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GBS Software and Apple
The main advantage of trading using opposite GBS Software and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GBS Software position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| GBS Software vs. SYSTEMAIR AB | GBS Software vs. LAir Liquide SA | GBS Software vs. AIR LIQUIDE ADR | GBS Software vs. Delta Air Lines |
| Apple vs. Darden Restaurants | Apple vs. TAL Education Group | Apple vs. Universal Entertainment | Apple vs. IDP EDUCATION LTD |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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