Correlation Between DBT SA and GECI International
Can any of the company-specific risk be diversified away by investing in both DBT SA and GECI International 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 DBT SA and GECI International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DBT SA and GECI International SA, you can compare the effects of market volatilities on DBT SA and GECI International 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 DBT SA with a short position of GECI International. Check out your portfolio center. Please also check ongoing floating volatility patterns of DBT SA and GECI International.
Diversification Opportunities for DBT SA and GECI International
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DBT and GECI is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding DBT SA and GECI International SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GECI International and DBT SA 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 DBT SA are associated (or correlated) with GECI International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GECI International has no effect on the direction of DBT SA i.e., DBT SA and GECI International go up and down completely randomly.
Pair Corralation between DBT SA and GECI International
Assuming the 90 days trading horizon DBT SA is expected to generate 2.3 times more return on investment than GECI International. However, DBT SA is 2.3 times more volatile than GECI International SA. It trades about 0.0 of its potential returns per unit of risk. GECI International SA is currently generating about -0.37 per unit of risk. If you would invest 50.00 in DBT SA on September 4, 2024 and sell it today you would lose (2.00) from holding DBT SA or give up 4.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DBT SA vs. GECI International SA
Performance |
| Timeline |
| DBT SA |
| GECI International |
DBT SA and GECI International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DBT SA and GECI International
The main advantage of trading using opposite DBT SA and GECI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DBT SA position performs unexpectedly, GECI International 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 GECI International will offset losses from the drop in GECI International's long position.The idea behind DBT SA and GECI International 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.| GECI International vs. Europlasma SA | GECI International vs. Archos | GECI International vs. DBT SA | GECI International vs. Manitou BF SA |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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