Correlation Between DBT SA and Balyo SA
Can any of the company-specific risk be diversified away by investing in both DBT SA and Balyo 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 DBT SA and Balyo SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DBT SA and Balyo SA, you can compare the effects of market volatilities on DBT SA and Balyo 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 DBT SA with a short position of Balyo SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of DBT SA and Balyo SA.
Diversification Opportunities for DBT SA and Balyo SA
Poor diversification
The 3 months correlation between DBT and Balyo is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding DBT SA and Balyo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balyo SA 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 Balyo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balyo SA has no effect on the direction of DBT SA i.e., DBT SA and Balyo SA go up and down completely randomly.
Pair Corralation between DBT SA and Balyo SA
Assuming the 90 days trading horizon DBT SA is expected to under-perform the Balyo SA. In addition to that, DBT SA is 3.05 times more volatile than Balyo SA. It trades about -0.03 of its total potential returns per unit of risk. Balyo SA is currently generating about 0.01 per unit of volatility. If you would invest 35.00 in Balyo SA on September 3, 2024 and sell it today you would lose (7.00) from holding Balyo SA or give up 20.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
DBT SA vs. Balyo SA
Performance |
| Timeline |
| DBT SA |
| Balyo SA |
DBT SA and Balyo SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DBT SA and Balyo SA
The main advantage of trading using opposite DBT SA and Balyo SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DBT SA position performs unexpectedly, Balyo 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 Balyo SA will offset losses from the drop in Balyo SA's long position.The idea behind DBT SA and Balyo 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.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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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