Correlation Between DataSolution and DB Financial

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

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

Diversification Opportunities for DataSolution and DB Financial

-0.09

Correlation Coefficient

DataSolution  DB Financial

Good diversification

The 3 months correlation between DataSolution and 016610 is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding DataSolution and DB Financial Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DB Financial Investment and DataSolution 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 DataSolution are associated (or correlated) with DB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DB Financial Investment has no effect on the direction of DataSolution i.e., DataSolution and DB Financial go up and down completely randomly.

Pair Corralation between DataSolution and DB Financial

Assuming the 90 days trading horizon DataSolution is expected to generate 2.4 times more return on investment than DB Financial. However, DataSolution is 2.4 times more volatile than DB Financial Investment. It trades about 0.2 of its potential returns per unit of risk. DB Financial Investment is currently generating about -0.02 per unit of risk. If you would invest  445,000  in DataSolution on October 12, 2024 and sell it today you would earn a total of  53,500  from holding DataSolution or generate 12.02% return on investment over 90 days.

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

DataSolution  vs.  DB Financial Investment

DataSolution

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DataSolution are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, DataSolution sustained solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with DataSolution and DB Financial

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

The idea behind DataSolution and DB Financial Investment 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.