Correlation Between DCB Bank and Angel One

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

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

Diversification Opportunities for DCB Bank and Angel One

0.59

Correlation Coefficient

DCB Bank  Angel One

Very weak diversification

The 3 months correlation between DCB and Angel is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding DCB Bank Limited and Angel One Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Angel One Limited and DCB 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 DCB Bank Limited are associated (or correlated) with Angel One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Angel One Limited has no effect on the direction of DCB Bank i.e., DCB Bank and Angel One go up and down completely randomly.

Pair Corralation between DCB Bank and Angel One

Assuming the 90 days trading horizon DCB Bank Limited is expected to generate 0.66 times more return on investment than Angel One. However, DCB Bank Limited is 1.51 times less risky than Angel One. It trades about -0.26 of its potential returns per unit of risk. Angel One Limited is currently generating about -0.46 per unit of risk. If you would invest  12,977  in DCB Bank Limited on October 8, 2024 and sell it today you would lose (867.00) from holding DCB Bank Limited or give up 6.68% of portfolio value over 90 days.

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

DCB Bank Limited  vs.  Angel One Limited

DCB Bank Limited

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DCB Bank Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, DCB Bank is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Angel One Limited

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Angel One Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Angel One displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DCB Bank and Angel One

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

The idea behind DCB Bank Limited and Angel One 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.