Correlation Between DCM Financial and Teamlease Services

Can any of the company-specific risk be diversified away by investing in both DCM Financial and Teamlease Services 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 DCM Financial and Teamlease Services into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for DCM Financial and Teamlease Services

0.13

Correlation Coefficient

DCM Financial  Teamlease Services

Average diversification

The 3 months correlation between DCM and Teamlease is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding DCM Financial Services and Teamlease Services Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teamlease Services and DCM Financial 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 DCM Financial Services are associated (or correlated) with Teamlease Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teamlease Services has no effect on the direction of DCM Financial i.e., DCM Financial and Teamlease Services go up and down completely randomly.

Pair Corralation between DCM Financial and Teamlease Services

Assuming the 90 days trading horizon DCM Financial Services is expected to under-perform the Teamlease Services. In addition to that, DCM Financial is 1.6 times more volatile than Teamlease Services Limited. It trades about -0.02 of its total potential returns per unit of risk. Teamlease Services Limited is currently generating about 0.04 per unit of volatility. If you would invest  294,355  in Teamlease Services Limited on October 7, 2024 and sell it today you would earn a total of  10,750  from holding Teamlease Services Limited or generate 3.65% return on investment over 90 days.

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

DCM Financial Services  vs.  Teamlease Services Limited

DCM Financial Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DCM Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, DCM Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Teamlease Services

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Teamlease Services Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Teamlease Services is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with DCM Financial and Teamlease Services

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

The idea behind DCM Financial Services and Teamlease Services 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.