Correlation Between Humasis and Dgb Financial

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

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

Diversification Opportunities for Humasis and Dgb Financial

-0.56

Correlation Coefficient

Humasis  Dgb Financial

Excellent diversification

The 3 months correlation between Humasis and Dgb is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Humasis Co and Dgb Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dgb Financial and Humasis 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 Humasis Co are associated (or correlated) with Dgb Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dgb Financial has no effect on the direction of Humasis i.e., Humasis and Dgb Financial go up and down completely randomly.

Pair Corralation between Humasis and Dgb Financial

Assuming the 90 days trading horizon Humasis Co is expected to under-perform the Dgb Financial. In addition to that, Humasis is 2.73 times more volatile than Dgb Financial. It trades about -0.03 of its total potential returns per unit of risk. Dgb Financial is currently generating about 0.22 per unit of volatility. If you would invest  800,269  in Dgb Financial on December 25, 2024 and sell it today you would earn a total of  114,731  from holding Dgb Financial or generate 14.34% return on investment over 90 days.

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

Humasis Co  vs.  Dgb Financial

Humasis

Risk-Adjusted Performance

Very Weak

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

Dgb Financial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dgb Financial are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dgb Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Humasis and Dgb Financial

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

The idea behind Humasis Co and Dgb 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.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.