Correlation Between Deutsche Brse and SINGAPORE EXUNSPADR/15

Can any of the company-specific risk be diversified away by investing in both Deutsche Brse and SINGAPORE EXUNSPADR/15 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 Brse and SINGAPORE EXUNSPADR/15 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Deutsche Brse AG and SINGAPORE EXUNSPADR15, you can compare the effects of market volatilities on Deutsche Brse and SINGAPORE EXUNSPADR/15 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 Brse with a short position of SINGAPORE EXUNSPADR/15. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Brse and SINGAPORE EXUNSPADR/15.

Diversification Opportunities for Deutsche Brse and SINGAPORE EXUNSPADR/15

0.5

Correlation Coefficient

Deutsche Brse  SINGAPORE EXUNSPADR/15

Very weak diversification

The 3 months correlation between Deutsche and SINGAPORE is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Brse AG and SINGAPORE EXUNSPADR15 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SINGAPORE EXUNSPADR/15 and Deutsche Brse 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 Brse AG are associated (or correlated) with SINGAPORE EXUNSPADR/15. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SINGAPORE EXUNSPADR/15 has no effect on the direction of Deutsche Brse i.e., Deutsche Brse and SINGAPORE EXUNSPADR/15 go up and down completely randomly.

Pair Corralation between Deutsche Brse and SINGAPORE EXUNSPADR/15

Assuming the 90 days trading horizon Deutsche Brse AG is expected to generate 0.43 times more return on investment than SINGAPORE EXUNSPADR/15. However, Deutsche Brse AG is 2.32 times less risky than SINGAPORE EXUNSPADR/15. It trades about 0.26 of its potential returns per unit of risk. SINGAPORE EXUNSPADR15 is currently generating about 0.07 per unit of risk. If you would invest  22,190  in Deutsche Brse AG on December 2, 2024 and sell it today you would earn a total of  2,930  from holding Deutsche Brse AG or generate 13.2% return on investment over 90 days.

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

Deutsche Brse AG  vs.  SINGAPORE EXUNSPADR15

Deutsche Brse AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Brse AG are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Deutsche Brse unveiled solid returns over the last few months and may actually be approaching a breakup point.

SINGAPORE EXUNSPADR/15

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SINGAPORE EXUNSPADR15 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SINGAPORE EXUNSPADR/15 may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Deutsche Brse and SINGAPORE EXUNSPADR/15

The main advantage of trading using opposite Deutsche Brse and SINGAPORE EXUNSPADR/15 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Brse position performs unexpectedly, SINGAPORE EXUNSPADR/15 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 SINGAPORE EXUNSPADR/15 will offset losses from the drop in SINGAPORE EXUNSPADR/15's long position.

The idea behind Deutsche Brse AG and SINGAPORE EXUNSPADR15 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.