Correlation Between TBC Bank and DFS Furniture
Can any of the company-specific risk be diversified away by investing in both TBC Bank and DFS Furniture 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 TBC Bank and DFS Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TBC Bank Group and DFS Furniture PLC, you can compare the effects of market volatilities on TBC Bank and DFS Furniture 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 TBC Bank with a short position of DFS Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of TBC Bank and DFS Furniture.
Diversification Opportunities for TBC Bank and DFS Furniture
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between TBC and DFS is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding TBC Bank Group and DFS Furniture PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFS Furniture PLC and TBC Bank 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 TBC Bank Group are associated (or correlated) with DFS Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFS Furniture PLC has no effect on the direction of TBC Bank i.e., TBC Bank and DFS Furniture go up and down completely randomly.
Pair Corralation between TBC Bank and DFS Furniture
Assuming the 90 days trading horizon TBC Bank Group is expected to generate 1.13 times more return on investment than DFS Furniture. However, TBC Bank is 1.13 times more volatile than DFS Furniture PLC. It trades about -0.09 of its potential returns per unit of risk. DFS Furniture PLC is currently generating about -0.37 per unit of risk. If you would invest 310,000 in TBC Bank Group on October 14, 2024 and sell it today you would lose (7,500) from holding TBC Bank Group or give up 2.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TBC Bank Group vs. DFS Furniture PLC
Performance |
| Timeline |
| TBC Bank Group |
| DFS Furniture PLC |
TBC Bank and DFS Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TBC Bank and DFS Furniture
The main advantage of trading using opposite TBC Bank and DFS Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TBC Bank position performs unexpectedly, DFS Furniture 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 DFS Furniture will offset losses from the drop in DFS Furniture's long position.| TBC Bank vs. Chocoladefabriken Lindt Spruengli | TBC Bank vs. Rockwood Realisation PLC | TBC Bank vs. Toyota Motor Corp | TBC Bank vs. Johnson Matthey PLC |
| DFS Furniture vs. Ubisoft Entertainment | DFS Furniture vs. Zinc Media Group | DFS Furniture vs. Ross Stores | DFS Furniture vs. TBC Bank Group |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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