Correlation Between FIRST SAVINGS and DEUTSCHE WOHNEN

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

By analyzing existing cross correlation between FIRST SAVINGS FINL and DEUTSCHE WOHNEN ADRS12, you can compare the effects of market volatilities on FIRST SAVINGS and DEUTSCHE WOHNEN 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 FIRST SAVINGS with a short position of DEUTSCHE WOHNEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIRST SAVINGS and DEUTSCHE WOHNEN.

Diversification Opportunities for FIRST SAVINGS and DEUTSCHE WOHNEN

-0.14

Correlation Coefficient

FIRST SAVINGS  DEUTSCHE WOHNEN

Good diversification

The 3 months correlation between FIRST and DEUTSCHE is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding FIRST SAVINGS FINL and DEUTSCHE WOHNEN ADRS12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DEUTSCHE WOHNEN ADRS12 and FIRST SAVINGS 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 FIRST SAVINGS FINL are associated (or correlated) with DEUTSCHE WOHNEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DEUTSCHE WOHNEN ADRS12 has no effect on the direction of FIRST SAVINGS i.e., FIRST SAVINGS and DEUTSCHE WOHNEN go up and down completely randomly.

Pair Corralation between FIRST SAVINGS and DEUTSCHE WOHNEN

Assuming the 90 days horizon FIRST SAVINGS FINL is expected to generate 1.36 times more return on investment than DEUTSCHE WOHNEN. However, FIRST SAVINGS is 1.36 times more volatile than DEUTSCHE WOHNEN ADRS12. It trades about -0.03 of its potential returns per unit of risk. DEUTSCHE WOHNEN ADRS12 is currently generating about -0.05 per unit of risk. If you would invest  2,406  in FIRST SAVINGS FINL on October 11, 2024 and sell it today you would lose (126.00) from holding FIRST SAVINGS FINL or give up 5.24% of portfolio value over 90 days.

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

FIRST SAVINGS FINL  vs.  DEUTSCHE WOHNEN ADRS12

FIRST SAVINGS FINL

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FIRST SAVINGS FINL are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FIRST SAVINGS reported solid returns over the last few months and may actually be approaching a breakup point.

DEUTSCHE WOHNEN ADRS12

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DEUTSCHE WOHNEN ADRS12 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, DEUTSCHE WOHNEN is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with FIRST SAVINGS and DEUTSCHE WOHNEN

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

The idea behind FIRST SAVINGS FINL and DEUTSCHE WOHNEN ADRS12 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.