Correlation Between DBT SA and Neovacs SA

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

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

Diversification Opportunities for DBT SA and Neovacs SA

0.81

Correlation Coefficient

DBT SA  Neovacs SA

Very poor diversification

The 3 months correlation between DBT and Neovacs is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding DBT SA and Neovacs SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neovacs SA and DBT SA 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 DBT SA are associated (or correlated) with Neovacs SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neovacs SA has no effect on the direction of DBT SA i.e., DBT SA and Neovacs SA go up and down completely randomly.

Pair Corralation between DBT SA and Neovacs SA

Assuming the 90 days trading horizon DBT SA is expected to under-perform the Neovacs SA. But the stock apears to be less risky and, when comparing its historical volatility, DBT SA is 5.19 times less risky than Neovacs SA. The stock trades about -0.14 of its potential returns per unit of risk. The Neovacs SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  700.00  in Neovacs SA on September 9, 2024 and sell it today you would lose (387.00) from holding Neovacs SA or give up 55.29% of portfolio value over 90 days.

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

DBT SA  vs.  Neovacs SA

DBT SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DBT SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Neovacs SA

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with DBT SA and Neovacs SA

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

The idea behind DBT SA and Neovacs SA 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 Commodity Directory module to find actively traded commodities issued by global exchanges.