Correlation Between SIMMTECH and DB Insurance

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Can any of the company-specific risk be diversified away by investing in both SIMMTECH and DB Insurance 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 SIMMTECH and DB Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIMMTECH Co and DB Insurance Co, you can compare the effects of market volatilities on SIMMTECH and DB Insurance 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 SIMMTECH with a short position of DB Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMMTECH and DB Insurance.

Diversification Opportunities for SIMMTECH and DB Insurance

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between SIMMTECH and 005830 is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding SIMMTECH Co and DB Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DB Insurance and SIMMTECH 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 SIMMTECH Co are associated (or correlated) with DB Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DB Insurance has no effect on the direction of SIMMTECH i.e., SIMMTECH and DB Insurance go up and down completely randomly.

Pair Corralation between SIMMTECH and DB Insurance

Assuming the 90 days trading horizon SIMMTECH Co is expected to under-perform the DB Insurance. In addition to that, SIMMTECH is 1.09 times more volatile than DB Insurance Co. It trades about -0.14 of its total potential returns per unit of risk. DB Insurance Co is currently generating about 0.04 per unit of volatility. If you would invest  10,540,000  in DB Insurance Co on September 14, 2024 and sell it today you would earn a total of  170,000  from holding DB Insurance Co or generate 1.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

SIMMTECH Co  vs.  DB Insurance Co

 Performance 
       Timeline  
SIMMTECH 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days SIMMTECH Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
DB Insurance 

Risk-Adjusted Performance

0 of 100

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

SIMMTECH and DB Insurance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SIMMTECH and DB Insurance

The main advantage of trading using opposite SIMMTECH and DB Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMMTECH position performs unexpectedly, DB Insurance 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 DB Insurance will offset losses from the drop in DB Insurance's long position.
The idea behind SIMMTECH Co and DB Insurance Co 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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