Correlation Between GBS Software and Renesas Electronics
Can any of the company-specific risk be diversified away by investing in both GBS Software and Renesas Electronics 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 Renesas Electronics 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 Renesas Electronics, you can compare the effects of market volatilities on GBS Software and Renesas Electronics 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 Renesas Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of GBS Software and Renesas Electronics.
Diversification Opportunities for GBS Software and Renesas Electronics
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GBS and Renesas is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding GBS Software AG and Renesas Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renesas Electronics 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 Renesas Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renesas Electronics has no effect on the direction of GBS Software i.e., GBS Software and Renesas Electronics go up and down completely randomly.
Pair Corralation between GBS Software and Renesas Electronics
Assuming the 90 days trading horizon GBS Software AG is expected to under-perform the Renesas Electronics. But the stock apears to be less risky and, when comparing its historical volatility, GBS Software AG is 1.31 times less risky than Renesas Electronics. The stock trades about 0.0 of its potential returns per unit of risk. The Renesas Electronics is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,225 in Renesas Electronics on November 5, 2024 and sell it today you would earn a total of 62.00 from holding Renesas Electronics or generate 5.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GBS Software AG vs. Renesas Electronics
Performance |
| Timeline |
| GBS Software AG |
| Renesas Electronics |
GBS Software and Renesas Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GBS Software and Renesas Electronics
The main advantage of trading using opposite GBS Software and Renesas Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GBS Software position performs unexpectedly, Renesas Electronics 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 Renesas Electronics will offset losses from the drop in Renesas Electronics' 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 |
| Renesas Electronics vs. MeVis Medical Solutions | Renesas Electronics vs. SILICON LABORATOR | Renesas Electronics vs. Quaker Chemical | Renesas Electronics vs. IMAGIN MEDICAL 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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