Correlation Between GBS Software and FORMPIPE SOFTWARE
Can any of the company-specific risk be diversified away by investing in both GBS Software and FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE AB, you can compare the effects of market volatilities on GBS Software and FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of GBS Software and FORMPIPE SOFTWARE.
Diversification Opportunities for GBS Software and FORMPIPE SOFTWARE
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GBS and FORMPIPE is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding GBS Software AG and FORMPIPE SOFTWARE AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FORMPIPE 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 FORMPIPE SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FORMPIPE SOFTWARE has no effect on the direction of GBS Software i.e., GBS Software and FORMPIPE SOFTWARE go up and down completely randomly.
Pair Corralation between GBS Software and FORMPIPE SOFTWARE
Assuming the 90 days trading horizon GBS Software AG is expected to generate 0.57 times more return on investment than FORMPIPE SOFTWARE. However, GBS Software AG is 1.76 times less risky than FORMPIPE SOFTWARE. It trades about 0.23 of its potential returns per unit of risk. FORMPIPE SOFTWARE AB is currently generating about 0.08 per unit of risk. If you would invest 276.00 in GBS Software AG on October 29, 2024 and sell it today you would earn a total of 28.00 from holding GBS Software AG or generate 10.14% 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. FORMPIPE SOFTWARE AB
Performance |
| Timeline |
| GBS Software AG |
| FORMPIPE SOFTWARE |
GBS Software and FORMPIPE SOFTWARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GBS Software and FORMPIPE SOFTWARE
The main advantage of trading using opposite GBS Software and FORMPIPE SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GBS Software position performs unexpectedly, FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE will offset losses from the drop in FORMPIPE SOFTWARE's long position.| GBS Software vs. Addus HomeCare | GBS Software vs. Sunny Optical Technology | GBS Software vs. Cognizant Technology Solutions | GBS Software vs. Check Point Software |
| FORMPIPE SOFTWARE vs. Fukuyama Transporting Co | FORMPIPE SOFTWARE vs. Thai Beverage Public | FORMPIPE SOFTWARE vs. Suntory Beverage Food | FORMPIPE SOFTWARE vs. Air Transport Services |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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