Correlation Between DB Financial and Jb Financial

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

By analyzing existing cross correlation between DB Financial Investment and Jb Financial, you can compare the effects of market volatilities on DB Financial and Jb Financial 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 DB Financial with a short position of Jb Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of DB Financial and Jb Financial.

Diversification Opportunities for DB Financial and Jb Financial

-0.68

Correlation Coefficient

DB Financial  Jb Financial

Excellent diversification

The 3 months correlation between 016610 and 175330 is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding DB Financial Investment and Jb Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jb Financial and DB Financial 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 DB Financial Investment are associated (or correlated) with Jb Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jb Financial has no effect on the direction of DB Financial i.e., DB Financial and Jb Financial go up and down completely randomly.

Pair Corralation between DB Financial and Jb Financial

Assuming the 90 days trading horizon DB Financial Investment is expected to generate 0.76 times more return on investment than Jb Financial. However, DB Financial Investment is 1.31 times less risky than Jb Financial. It trades about 0.15 of its potential returns per unit of risk. Jb Financial is currently generating about -0.15 per unit of risk. If you would invest  506,000  in DB Financial Investment on September 27, 2024 and sell it today you would earn a total of  34,000  from holding DB Financial Investment or generate 6.72% return on investment over 90 days.

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

DB Financial Investment  vs.  Jb Financial

DB Financial Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DB Financial Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, DB Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jb Financial

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jb Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jb Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with DB Financial and Jb Financial

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

The idea behind DB Financial Investment and Jb Financial 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.

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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.