Correlation Between Banco Do and DBS Group
Can any of the company-specific risk be diversified away by investing in both Banco Do and DBS Group 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 Banco Do and DBS Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Do Brasil and DBS Group Holdings, you can compare the effects of market volatilities on Banco Do and DBS Group 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 Banco Do with a short position of DBS Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Do and DBS Group.
Diversification Opportunities for Banco Do and DBS Group
Pay attention - limited upside
The 3 months correlation between Banco and DBS is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Banco Do Brasil and DBS Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DBS Group Holdings and Banco Do 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 Banco Do Brasil are associated (or correlated) with DBS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DBS Group Holdings has no effect on the direction of Banco Do i.e., Banco Do and DBS Group go up and down completely randomly.
Pair Corralation between Banco Do and DBS Group
Assuming the 90 days horizon Banco Do Brasil is expected to under-perform the DBS Group. In addition to that, Banco Do is 1.15 times more volatile than DBS Group Holdings. It trades about -0.14 of its total potential returns per unit of risk. DBS Group Holdings is currently generating about 0.17 per unit of volatility. If you would invest 10,785 in DBS Group Holdings on August 28, 2024 and sell it today you would earn a total of 1,712 from holding DBS Group Holdings or generate 15.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Banco Do Brasil vs. DBS Group Holdings
Performance |
| Timeline |
| Banco Do Brasil |
| DBS Group Holdings |
Banco Do and DBS Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Do and DBS Group
The main advantage of trading using opposite Banco Do and DBS Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Do position performs unexpectedly, DBS Group 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 DBS Group will offset losses from the drop in DBS Group's long position.| Banco Do vs. BB Seguridade Participacoes | Banco Do vs. Banco Santander Brasil | Banco Do vs. Centrais Electricas Brasileiras | Banco Do vs. Itau Unibanco Banco |
| DBS Group vs. KBC Groep NV | DBS Group vs. United Overseas Bank | DBS Group vs. Embassy Bancorp | DBS Group vs. Overseas Chinese Banking |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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