Correlation Between Globalink Investment and Deutsche Bank

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

By analyzing existing cross correlation between Globalink Investment Unit and Deutsche Bank AG, you can compare the effects of market volatilities on Globalink Investment and Deutsche Bank 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 Globalink Investment with a short position of Deutsche Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globalink Investment and Deutsche Bank.

Diversification Opportunities for Globalink Investment and Deutsche Bank

-0.05

Correlation Coefficient

Globalink Investment  Deutsche Bank

Good diversification

The 3 months correlation between Globalink and Deutsche is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Globalink Investment Unit and Deutsche Bank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Bank AG and Globalink Investment 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 Globalink Investment Unit are associated (or correlated) with Deutsche Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Bank AG has no effect on the direction of Globalink Investment i.e., Globalink Investment and Deutsche Bank go up and down completely randomly.

Pair Corralation between Globalink Investment and Deutsche Bank

Assuming the 90 days horizon Globalink Investment is expected to generate 1.42 times less return on investment than Deutsche Bank. But when comparing it to its historical volatility, Globalink Investment Unit is 2.19 times less risky than Deutsche Bank. It trades about 0.1 of its potential returns per unit of risk. Deutsche Bank AG is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,662  in Deutsche Bank AG on September 18, 2024 and sell it today you would earn a total of  99.00  from holding Deutsche Bank AG or generate 5.96% return on investment over 90 days.

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

Globalink Investment Unit  vs.  Deutsche Bank AG

Globalink Investment Unit

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Globalink Investment Unit are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, Globalink Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Deutsche Bank AG

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank AG are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental drivers, Deutsche Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Globalink Investment and Deutsche Bank

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

The idea behind Globalink Investment Unit and Deutsche Bank AG 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.