Correlation Between DBS Group and Japan Post
Can any of the company-specific risk be diversified away by investing in both DBS Group 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 DBS Group and Japan Post into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DBS Group Holdings and Japan Post Bank, you can compare the effects of market volatilities on DBS Group 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 DBS Group with a short position of Japan Post. Check out your portfolio center. Please also check ongoing floating volatility patterns of DBS Group and Japan Post.
Diversification Opportunities for DBS Group and Japan Post
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DBS and Japan is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding DBS Group Holdings 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 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 Holdings 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 DBS Group i.e., DBS Group and Japan Post go up and down completely randomly.
Pair Corralation between DBS Group and Japan Post
Assuming the 90 days trading horizon DBS Group Holdings is expected to generate 0.63 times more return on investment than Japan Post. However, DBS Group Holdings is 1.59 times less risky than Japan Post. It trades about 0.09 of its potential returns per unit of risk. Japan Post Bank is currently generating about 0.02 per unit of risk. If you would invest 1,837 in DBS Group Holdings on September 23, 2024 and sell it today you would earn a total of 1,193 from holding DBS Group Holdings or generate 64.94% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
DBS Group Holdings vs. Japan Post Bank
Performance |
Timeline |
DBS Group Holdings |
Japan Post Bank |
DBS Group and Japan Post Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with DBS Group and Japan Post
The main advantage of trading using opposite DBS Group and Japan Post positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DBS Group 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.DBS Group vs. China Merchants Bank | DBS Group vs. HDFC Bank Limited | DBS Group vs. ICICI Bank Limited | DBS Group vs. PT Bank Central |
Japan Post vs. China Merchants Bank | Japan Post vs. HDFC Bank Limited | Japan Post vs. ICICI Bank Limited | Japan Post vs. PT Bank Central |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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