Correlation Between Deutsche Bank and Goldenstone Acquisition

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

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

Diversification Opportunities for Deutsche Bank and Goldenstone Acquisition

0.31

Correlation Coefficient

Deutsche Bank  Goldenstone Acquisition

Weak diversification

The 3 months correlation between Deutsche and Goldenstone is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank AG and Goldenstone Acquisition Limite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldenstone Acquisition and Deutsche Bank 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 Deutsche Bank AG are associated (or correlated) with Goldenstone Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldenstone Acquisition has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Goldenstone Acquisition go up and down completely randomly.

Pair Corralation between Deutsche Bank and Goldenstone Acquisition

Allowing for the 90-day total investment horizon Deutsche Bank is expected to generate 70.04 times less return on investment than Goldenstone Acquisition. But when comparing it to its historical volatility, Deutsche Bank AG is 21.05 times less risky than Goldenstone Acquisition. It trades about 0.03 of its potential returns per unit of risk. Goldenstone Acquisition Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3.51  in Goldenstone Acquisition Limited on September 22, 2024 and sell it today you would lose (0.71) from holding Goldenstone Acquisition Limited or give up 20.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	38.1%
Values	Daily Returns

Deutsche Bank AG  vs.  Goldenstone Acquisition Limite

Deutsche Bank AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deutsche Bank AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Deutsche Bank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Goldenstone Acquisition

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Goldenstone Acquisition Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, Goldenstone Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Deutsche Bank and Goldenstone Acquisition

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

The idea behind Deutsche Bank AG and Goldenstone Acquisition Limited 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.