Correlation Between DBT SA and Memscap Regpt

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

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

Diversification Opportunities for DBT SA and Memscap Regpt

0.78

Correlation Coefficient

DBT SA  Memscap Regpt

Poor diversification

The 3 months correlation between DBT and Memscap is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding DBT SA and Memscap Regpt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Memscap Regpt 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 Memscap Regpt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Memscap Regpt has no effect on the direction of DBT SA i.e., DBT SA and Memscap Regpt go up and down completely randomly.

Pair Corralation between DBT SA and Memscap Regpt

Assuming the 90 days trading horizon DBT SA is expected to generate 1.38 times more return on investment than Memscap Regpt. However, DBT SA is 1.38 times more volatile than Memscap Regpt. It trades about -0.1 of its potential returns per unit of risk. Memscap Regpt is currently generating about -0.3 per unit of risk. If you would invest  68.00  in DBT SA on September 4, 2024 and sell it today you would lose (20.00) from holding DBT SA or give up 29.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

DBT SA  vs.  Memscap Regpt

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.

Memscap Regpt

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Memscap Regpt has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with DBT SA and Memscap Regpt

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

The idea behind DBT SA and Memscap Regpt 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.