Correlation Between DBS GROUP and COSTCO WHOLESALE

Can any of the company-specific risk be diversified away by investing in both DBS GROUP and COSTCO WHOLESALE 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 DBS GROUP and COSTCO WHOLESALE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DBS GROUP HLDGS and COSTCO WHOLESALE CDR, you can compare the effects of market volatilities on DBS GROUP and COSTCO WHOLESALE 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 DBS GROUP with a short position of COSTCO WHOLESALE. Check out your portfolio center. Please also check ongoing floating volatility patterns of DBS GROUP and COSTCO WHOLESALE.

Diversification Opportunities for DBS GROUP and COSTCO WHOLESALE

0.68

Correlation Coefficient

DBS GROUP  COSTCO WHOLESALE

Poor diversification

The 3 months correlation between DBS and COSTCO is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding DBS GROUP HLDGS and COSTCO WHOLESALE CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSTCO WHOLESALE CDR and DBS GROUP 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 DBS GROUP HLDGS are associated (or correlated) with COSTCO WHOLESALE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSTCO WHOLESALE CDR has no effect on the direction of DBS GROUP i.e., DBS GROUP and COSTCO WHOLESALE go up and down completely randomly.

Pair Corralation between DBS GROUP and COSTCO WHOLESALE

Assuming the 90 days trading horizon DBS GROUP HLDGS is expected to generate 0.55 times more return on investment than COSTCO WHOLESALE. However, DBS GROUP HLDGS is 1.81 times less risky than COSTCO WHOLESALE. It trades about 0.02 of its potential returns per unit of risk. COSTCO WHOLESALE CDR is currently generating about -0.09 per unit of risk. If you would invest  3,065  in DBS GROUP HLDGS on December 19, 2024 and sell it today you would earn a total of  36.00  from holding DBS GROUP HLDGS or generate 1.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

DBS GROUP HLDGS  vs.  COSTCO WHOLESALE CDR

DBS GROUP HLDGS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DBS GROUP HLDGS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, DBS GROUP is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

COSTCO WHOLESALE CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days COSTCO WHOLESALE CDR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with DBS GROUP and COSTCO WHOLESALE

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

The idea behind DBS GROUP HLDGS and COSTCO WHOLESALE CDR 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.