Correlation Between USU Software and GBS Software
Can any of the company-specific risk be diversified away by investing in both USU Software and GBS 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 USU Software and GBS Software 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 GBS Software AG, you can compare the effects of market volatilities on USU Software and GBS 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 USU Software with a short position of GBS Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of USU Software and GBS Software.
Diversification Opportunities for USU Software and GBS Software
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between USU and GBS is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding USU Software AG and GBS Software AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GBS Software AG 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 GBS Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GBS Software AG has no effect on the direction of USU Software i.e., USU Software and GBS Software go up and down completely randomly.
Pair Corralation between USU Software and GBS Software
Assuming the 90 days trading horizon USU Software is expected to generate 1.21 times less return on investment than GBS Software. But when comparing it to its historical volatility, USU Software AG is 1.9 times less risky than GBS Software. It trades about 0.05 of its potential returns per unit of risk. GBS Software AG is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 268.00 in GBS Software AG on October 31, 2024 and sell it today you would earn a total of 12.00 from holding GBS Software AG or generate 4.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.78% |
| Values | Daily Returns |
USU Software AG vs. GBS Software AG
Performance |
| Timeline |
| USU Software AG |
| GBS Software AG |
USU Software and GBS Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with USU Software and GBS Software
The main advantage of trading using opposite USU Software and GBS Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USU Software position performs unexpectedly, GBS 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 GBS Software will offset losses from the drop in GBS Software's long position.| USU Software vs. Spirent Communications plc | USU Software vs. Hyatt Hotels | USU Software vs. Verizon Communications | USU Software vs. TELECOM ITALIA |
| GBS Software vs. Penta Ocean Construction Co | GBS Software vs. FUYO GENERAL LEASE | GBS Software vs. Hanison Construction Holdings | GBS Software vs. FARM 51 GROUP |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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