Correlation Between Joint Stock and DEUTSCHE

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

By analyzing existing cross correlation between Joint Stock and DEUTSCHE TELEKOM INTL, you can compare the effects of market volatilities on Joint Stock and DEUTSCHE 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 Joint Stock with a short position of DEUTSCHE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Joint Stock and DEUTSCHE.

Diversification Opportunities for Joint Stock and DEUTSCHE

-0.07

Correlation Coefficient

Joint Stock  DEUTSCHE

Good diversification

The 3 months correlation between Joint and DEUTSCHE is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Joint Stock and DEUTSCHE TELEKOM INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DEUTSCHE TELEKOM INTL and Joint Stock 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 Joint Stock are associated (or correlated) with DEUTSCHE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DEUTSCHE TELEKOM INTL has no effect on the direction of Joint Stock i.e., Joint Stock and DEUTSCHE go up and down completely randomly.

Pair Corralation between Joint Stock and DEUTSCHE

Given the investment horizon of 90 days Joint Stock is expected to under-perform the DEUTSCHE. In addition to that, Joint Stock is 5.23 times more volatile than DEUTSCHE TELEKOM INTL. It trades about -0.05 of its total potential returns per unit of risk. DEUTSCHE TELEKOM INTL is currently generating about -0.04 per unit of volatility. If you would invest  12,892  in DEUTSCHE TELEKOM INTL on September 12, 2024 and sell it today you would lose (161.00) from holding DEUTSCHE TELEKOM INTL or give up 1.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	82.81%
Values	Daily Returns

Joint Stock  vs.  DEUTSCHE TELEKOM INTL

Joint Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Joint Stock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

DEUTSCHE TELEKOM INTL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DEUTSCHE TELEKOM INTL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, DEUTSCHE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Joint Stock and DEUTSCHE

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

The idea behind Joint Stock and DEUTSCHE TELEKOM INTL 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.