Correlation Between GBS Software and BRIT AMER
Can any of the company-specific risk be diversified away by investing in both GBS Software and BRIT AMER 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 BRIT AMER 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 BRIT AMER TOBACCO, you can compare the effects of market volatilities on GBS Software and BRIT AMER 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 BRIT AMER. Check out your portfolio center. Please also check ongoing floating volatility patterns of GBS Software and BRIT AMER.
Diversification Opportunities for GBS Software and BRIT AMER
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GBS and BRIT is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding GBS Software AG and BRIT AMER TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRIT AMER TOBACCO 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 BRIT AMER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRIT AMER TOBACCO has no effect on the direction of GBS Software i.e., GBS Software and BRIT AMER go up and down completely randomly.
Pair Corralation between GBS Software and BRIT AMER
Assuming the 90 days trading horizon GBS Software AG is expected to generate 2.0 times more return on investment than BRIT AMER. However, GBS Software is 2.0 times more volatile than BRIT AMER TOBACCO. It trades about 0.04 of its potential returns per unit of risk. BRIT AMER TOBACCO is currently generating about 0.03 per unit of risk. If you would invest 208.00 in GBS Software AG on October 18, 2024 and sell it today you would earn a total of 84.00 from holding GBS Software AG or generate 40.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GBS Software AG vs. BRIT AMER TOBACCO
Performance |
| Timeline |
| GBS Software AG |
| BRIT AMER TOBACCO |
GBS Software and BRIT AMER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GBS Software and BRIT AMER
The main advantage of trading using opposite GBS Software and BRIT AMER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GBS Software position performs unexpectedly, BRIT AMER 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 BRIT AMER will offset losses from the drop in BRIT AMER's long position.| GBS Software vs. Vienna Insurance Group | GBS Software vs. LOANDEPOT INC A | GBS Software vs. VIENNA INSURANCE GR | GBS Software vs. United Insurance Holdings |
| BRIT AMER vs. Guidewire Software | BRIT AMER vs. GBS Software AG | BRIT AMER vs. PSI Software AG | BRIT AMER vs. SPORT LISBOA E |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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