Correlation Between APPLIED MATERIALS and DBS Group

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

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

Diversification Opportunities for APPLIED MATERIALS and DBS Group

-0.68

Correlation Coefficient

APPLIED MATERIALS  DBS Group

Excellent diversification

The 3 months correlation between APPLIED and DBS is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and DBS Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DBS Group Holdings and APPLIED MATERIALS 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 APPLIED MATERIALS are associated (or correlated) with DBS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DBS Group Holdings has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and DBS Group go up and down completely randomly.

Pair Corralation between APPLIED MATERIALS and DBS Group

Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 1.55 times more return on investment than DBS Group. However, APPLIED MATERIALS is 1.55 times more volatile than DBS Group Holdings. It trades about 0.24 of its potential returns per unit of risk. DBS Group Holdings is currently generating about 0.12 per unit of risk. If you would invest  15,902  in APPLIED MATERIALS on October 11, 2024 and sell it today you would earn a total of  1,124  from holding APPLIED MATERIALS or generate 7.07% return on investment over 90 days.

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

APPLIED MATERIALS  vs.  DBS Group Holdings

APPLIED MATERIALS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days APPLIED MATERIALS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

DBS Group Holdings

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DBS Group Holdings are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, DBS Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with APPLIED MATERIALS and DBS Group

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

The idea behind APPLIED MATERIALS and DBS Group Holdings 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.