Correlation Between AdCapital and Deutsche Pfandbriefbank

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

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

Diversification Opportunities for AdCapital and Deutsche Pfandbriefbank

0.84

Correlation Coefficient

AdCapital  Deutsche Pfandbriefbank

Very poor diversification

The 3 months correlation between AdCapital and Deutsche is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding AdCapital AG and Deutsche Pfandbriefbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Pfandbriefbank and AdCapital 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 AdCapital AG are associated (or correlated) with Deutsche Pfandbriefbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Pfandbriefbank has no effect on the direction of AdCapital i.e., AdCapital and Deutsche Pfandbriefbank go up and down completely randomly.

Pair Corralation between AdCapital and Deutsche Pfandbriefbank

Assuming the 90 days horizon AdCapital AG is expected to generate 1.28 times more return on investment than Deutsche Pfandbriefbank. However, AdCapital is 1.28 times more volatile than Deutsche Pfandbriefbank AG. It trades about 0.04 of its potential returns per unit of risk. Deutsche Pfandbriefbank AG is currently generating about -0.01 per unit of risk. If you would invest  139.00  in AdCapital AG on October 5, 2024 and sell it today you would earn a total of  57.00  from holding AdCapital AG or generate 41.01% return on investment over 90 days.

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

AdCapital AG  vs.  Deutsche Pfandbriefbank AG

AdCapital AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AdCapital AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Deutsche Pfandbriefbank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deutsche Pfandbriefbank AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with AdCapital and Deutsche Pfandbriefbank

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

The idea behind AdCapital AG and Deutsche Pfandbriefbank AG 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.