Correlation Between Hitek Global and Guidewire Software

Can any of the company-specific risk be diversified away by investing in both Hitek Global and Guidewire 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 Hitek Global and Guidewire Software into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hitek Global Ordinary and Guidewire Software, you can compare the effects of market volatilities on Hitek Global and Guidewire 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 Hitek Global with a short position of Guidewire Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitek Global and Guidewire Software.

Diversification Opportunities for Hitek Global and Guidewire Software

-0.77

Correlation Coefficient

Hitek Global  Guidewire Software

Pay attention - limited upside

The 3 months correlation between Hitek and Guidewire is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hitek Global Ordinary and Guidewire Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidewire Software and Hitek Global 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 Hitek Global Ordinary are associated (or correlated) with Guidewire Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidewire Software has no effect on the direction of Hitek Global i.e., Hitek Global and Guidewire Software go up and down completely randomly.

Pair Corralation between Hitek Global and Guidewire Software

Given the investment horizon of 90 days Hitek Global Ordinary is expected to under-perform the Guidewire Software. In addition to that, Hitek Global is 2.11 times more volatile than Guidewire Software. It trades about -0.06 of its total potential returns per unit of risk. Guidewire Software is currently generating about 0.29 per unit of volatility. If you would invest  14,614  in Guidewire Software on September 2, 2024 and sell it today you would earn a total of  5,675  from holding Guidewire Software or generate 38.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Hitek Global Ordinary  vs.  Guidewire Software

Hitek Global Ordinary

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hitek Global Ordinary has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Guidewire Software

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guidewire Software are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Guidewire Software exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hitek Global and Guidewire Software

The main advantage of trading using opposite Hitek Global and Guidewire Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitek Global position performs unexpectedly, Guidewire 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 Guidewire Software will offset losses from the drop in Guidewire Software's long position.

The idea behind Hitek Global Ordinary and Guidewire Software pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.