Correlation Between PROSIEBENSAT1 MEDIADR4 and GBS Software
Can any of the company-specific risk be diversified away by investing in both PROSIEBENSAT1 MEDIADR4 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 PROSIEBENSAT1 MEDIADR4 and GBS Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PROSIEBENSAT1 MEDIADR4 and GBS Software AG, you can compare the effects of market volatilities on PROSIEBENSAT1 MEDIADR4 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 PROSIEBENSAT1 MEDIADR4 with a short position of GBS Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of PROSIEBENSAT1 MEDIADR4 and GBS Software.
Diversification Opportunities for PROSIEBENSAT1 MEDIADR4 and GBS Software
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PROSIEBENSAT1 and GBS is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding PROSIEBENSAT1 MEDIADR4 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 PROSIEBENSAT1 MEDIADR4 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 PROSIEBENSAT1 MEDIADR4 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 PROSIEBENSAT1 MEDIADR4 i.e., PROSIEBENSAT1 MEDIADR4 and GBS Software go up and down completely randomly.
Pair Corralation between PROSIEBENSAT1 MEDIADR4 and GBS Software
Assuming the 90 days trading horizon PROSIEBENSAT1 MEDIADR4 is expected to generate 1.65 times less return on investment than GBS Software. In addition to that, PROSIEBENSAT1 MEDIADR4 is 1.1 times more volatile than GBS Software AG. It trades about 0.13 of its total potential returns per unit of risk. GBS Software AG is currently generating about 0.23 per unit of volatility. 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PROSIEBENSAT1 MEDIADR4 vs. GBS Software AG
Performance |
| Timeline |
| PROSIEBENSAT1 MEDIADR4 |
| GBS Software AG |
PROSIEBENSAT1 MEDIADR4 and GBS Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PROSIEBENSAT1 MEDIADR4 and GBS Software
The main advantage of trading using opposite PROSIEBENSAT1 MEDIADR4 and GBS Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PROSIEBENSAT1 MEDIADR4 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.| PROSIEBENSAT1 MEDIADR4 vs. Heidelberg Materials AG | PROSIEBENSAT1 MEDIADR4 vs. AUST AGRICULTURAL | PROSIEBENSAT1 MEDIADR4 vs. North American Construction | PROSIEBENSAT1 MEDIADR4 vs. GOODYEAR T RUBBER |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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