Correlation Between USU Software and Guangdong Investment
Can any of the company-specific risk be diversified away by investing in both USU Software and Guangdong Investment 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 USU Software and Guangdong Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between USU Software AG and Guangdong Investment Limited, you can compare the effects of market volatilities on USU Software and Guangdong Investment 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 USU Software with a short position of Guangdong Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of USU Software and Guangdong Investment.
Diversification Opportunities for USU Software and Guangdong Investment
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between USU and Guangdong is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding USU Software AG and Guangdong Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Investment and USU 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 USU Software AG are associated (or correlated) with Guangdong Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Investment has no effect on the direction of USU Software i.e., USU Software and Guangdong Investment go up and down completely randomly.
Pair Corralation between USU Software and Guangdong Investment
Assuming the 90 days trading horizon USU Software AG is expected to generate 0.29 times more return on investment than Guangdong Investment. However, USU Software AG is 3.43 times less risky than Guangdong Investment. It trades about 0.26 of its potential returns per unit of risk. Guangdong Investment Limited is currently generating about -0.12 per unit of risk. If you would invest 2,140 in USU Software AG on October 23, 2024 and sell it today you would earn a total of 90.00 from holding USU Software AG or generate 4.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.75% |
| Values | Daily Returns |
USU Software AG vs. Guangdong Investment Limited
Performance |
| Timeline |
| USU Software AG |
| Guangdong Investment |
USU Software and Guangdong Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with USU Software and Guangdong Investment
The main advantage of trading using opposite USU Software and Guangdong Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USU Software position performs unexpectedly, Guangdong Investment 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 Guangdong Investment will offset losses from the drop in Guangdong Investment's long position.| USU Software vs. Sumitomo Mitsui Construction | USU Software vs. PARKEN Sport Entertainment | USU Software vs. Granite Construction | USU Software vs. ATRESMEDIA |
| Guangdong Investment vs. FORMPIPE SOFTWARE AB | Guangdong Investment vs. USU Software AG | Guangdong Investment vs. CyberArk Software | Guangdong Investment vs. High Liner Foods |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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