Correlation Between GOODTECH ASA and Guidewire Software

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

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

Diversification Opportunities for GOODTECH ASA and Guidewire Software

0.36

Correlation Coefficient

GOODTECH ASA  Guidewire Software

Weak diversification

The 3 months correlation between GOODTECH and Guidewire is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding GOODTECH ASA A and Guidewire Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidewire Software and GOODTECH ASA 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 GOODTECH ASA A 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 GOODTECH ASA i.e., GOODTECH ASA and Guidewire Software go up and down completely randomly.

Pair Corralation between GOODTECH ASA and Guidewire Software

Assuming the 90 days horizon GOODTECH ASA A is expected to generate 0.7 times more return on investment than Guidewire Software. However, GOODTECH ASA A is 1.43 times less risky than Guidewire Software. It trades about 0.13 of its potential returns per unit of risk. Guidewire Software is currently generating about 0.08 per unit of risk. If you would invest  69.00  in GOODTECH ASA A on April 24, 2025 and sell it today you would earn a total of  10.00  from holding GOODTECH ASA A or generate 14.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

GOODTECH ASA A  vs.  Guidewire Software

GOODTECH ASA A

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GOODTECH ASA A are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GOODTECH ASA reported solid returns over the last few months and may actually be approaching a breakup point.

Guidewire Software

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Guidewire Software are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Guidewire Software unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GOODTECH ASA and Guidewire Software

The main advantage of trading using opposite GOODTECH ASA and Guidewire Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOODTECH ASA 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 GOODTECH ASA A 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.