Correlation Between SoftBank Group and GSTechnologies
Can any of the company-specific risk be diversified away by investing in both SoftBank Group and GSTechnologies 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 SoftBank Group and GSTechnologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SoftBank Group Corp and GSTechnologies, you can compare the effects of market volatilities on SoftBank Group and GSTechnologies 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 SoftBank Group with a short position of GSTechnologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoftBank Group and GSTechnologies.
Diversification Opportunities for SoftBank Group and GSTechnologies
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SoftBank and GSTechnologies is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding SoftBank Group Corp and GSTechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSTechnologies and SoftBank Group 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 SoftBank Group Corp are associated (or correlated) with GSTechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSTechnologies has no effect on the direction of SoftBank Group i.e., SoftBank Group and GSTechnologies go up and down completely randomly.
Pair Corralation between SoftBank Group and GSTechnologies
Assuming the 90 days trading horizon SoftBank Group is expected to generate 12.16 times less return on investment than GSTechnologies. But when comparing it to its historical volatility, SoftBank Group Corp is 2.53 times less risky than GSTechnologies. It trades about 0.05 of its potential returns per unit of risk. GSTechnologies is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 78.00 in GSTechnologies on September 25, 2024 and sell it today you would earn a total of 112.00 from holding GSTechnologies or generate 143.59% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 67.19% |
Values | Daily Returns |
SoftBank Group Corp vs. GSTechnologies
Performance |
Timeline |
SoftBank Group Corp |
GSTechnologies |
SoftBank Group and GSTechnologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SoftBank Group and GSTechnologies
The main advantage of trading using opposite SoftBank Group and GSTechnologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoftBank Group position performs unexpectedly, GSTechnologies 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 GSTechnologies will offset losses from the drop in GSTechnologies' long position.SoftBank Group vs. Endeavour Mining Corp | SoftBank Group vs. Fulcrum Metals PLC | SoftBank Group vs. Jacquet Metal Service | SoftBank Group vs. AMG Advanced Metallurgical |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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