Correlation Between Deutsche Bank and JAPAN POST

Can any of the company-specific risk be diversified away by investing in both Deutsche Bank and JAPAN POST 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 JAPAN POST 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 JAPAN POST BANK, you can compare the effects of market volatilities on Deutsche Bank and JAPAN POST 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 JAPAN POST. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Bank and JAPAN POST.

Diversification Opportunities for Deutsche Bank and JAPAN POST

0.05

Correlation Coefficient

Deutsche Bank  JAPAN POST

Significant diversification

The 3 months correlation between Deutsche and JAPAN is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank AG and JAPAN POST BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN POST BANK 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 JAPAN POST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN POST BANK has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and JAPAN POST go up and down completely randomly.

Pair Corralation between Deutsche Bank and JAPAN POST

Allowing for the 90-day total investment horizon Deutsche Bank is expected to generate 1.29 times less return on investment than JAPAN POST. But when comparing it to its historical volatility, Deutsche Bank AG is 1.85 times less risky than JAPAN POST. It trades about 0.03 of its potential returns per unit of risk. JAPAN POST BANK is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  915.00  in JAPAN POST BANK on October 1, 2024 and sell it today you would earn a total of  5.00  from holding JAPAN POST BANK or generate 0.55% return on investment over 90 days.

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

Deutsche Bank AG  vs.  JAPAN POST BANK

Deutsche Bank AG

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

JAPAN POST BANK

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JAPAN POST BANK are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, JAPAN POST is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Deutsche Bank and JAPAN POST

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

The idea behind Deutsche Bank AG and JAPAN POST BANK 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.