Correlation Between GBS Software and Moodys
Can any of the company-specific risk be diversified away by investing in both GBS Software and Moodys 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 Moodys 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 Moodys, you can compare the effects of market volatilities on GBS Software and Moodys 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 Moodys. Check out your portfolio center. Please also check ongoing floating volatility patterns of GBS Software and Moodys.
Diversification Opportunities for GBS Software and Moodys
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GBS and Moodys is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding GBS Software AG and Moodys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moodys 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 Moodys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moodys has no effect on the direction of GBS Software i.e., GBS Software and Moodys go up and down completely randomly.
Pair Corralation between GBS Software and Moodys
Assuming the 90 days trading horizon GBS Software AG is expected to generate 1.47 times more return on investment than Moodys. However, GBS Software is 1.47 times more volatile than Moodys. It trades about 0.19 of its potential returns per unit of risk. Moodys is currently generating about -0.04 per unit of risk. If you would invest 250.00 in GBS Software AG on October 16, 2024 and sell it today you would earn a total of 40.00 from holding GBS Software AG or generate 16.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GBS Software AG vs. Moodys
Performance |
| Timeline |
| GBS Software AG |
| Moodys |
GBS Software and Moodys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GBS Software and Moodys
The main advantage of trading using opposite GBS Software and Moodys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GBS Software position performs unexpectedly, Moodys 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 Moodys will offset losses from the drop in Moodys' long position.| GBS Software vs. Virtus Investment Partners | GBS Software vs. New Residential Investment | GBS Software vs. Infrastrutture Wireless Italiane | GBS Software vs. VIRGIN WINES UK |
| Moodys vs. Easy Software AG | Moodys vs. GBS Software AG | Moodys vs. IDP EDUCATION LTD | Moodys vs. Grand Canyon Education |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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