Correlation Between Memscap Regpt and DBT SA

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

By analyzing existing cross correlation between Memscap Regpt and DBT SA, you can compare the effects of market volatilities on Memscap Regpt and DBT SA 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 Memscap Regpt with a short position of DBT SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Memscap Regpt and DBT SA.

Diversification Opportunities for Memscap Regpt and DBT SA

-0.12

Correlation Coefficient

Memscap Regpt  DBT SA

Good diversification

The 3 months correlation between Memscap and DBT is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Memscap Regpt and DBT SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DBT SA and Memscap Regpt 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 Memscap Regpt are associated (or correlated) with DBT SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DBT SA has no effect on the direction of Memscap Regpt i.e., Memscap Regpt and DBT SA go up and down completely randomly.

Pair Corralation between Memscap Regpt and DBT SA

Assuming the 90 days trading horizon Memscap Regpt is expected to under-perform the DBT SA. But the stock apears to be less risky and, when comparing its historical volatility, Memscap Regpt is 1.0 times less risky than DBT SA. The stock trades about -0.02 of its potential returns per unit of risk. The DBT SA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  36.00  in DBT SA on December 30, 2024 and sell it today you would earn a total of  18.00  from holding DBT SA or generate 50.0% return on investment over 90 days.

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

Memscap Regpt  vs.  DBT SA

Memscap Regpt

Risk-Adjusted Performance

Very Weak

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

DBT SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DBT SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, DBT SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Memscap Regpt and DBT SA

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

The idea behind Memscap Regpt and DBT SA 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.