Correlation Between DB Insurance and DeviceENGCOLtd

Can any of the company-specific risk be diversified away by investing in both DB Insurance and DeviceENGCOLtd 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 DB Insurance and DeviceENGCOLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DB Insurance Co and DeviceENGCOLtd, you can compare the effects of market volatilities on DB Insurance and DeviceENGCOLtd 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 DB Insurance with a short position of DeviceENGCOLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of DB Insurance and DeviceENGCOLtd.

Diversification Opportunities for DB Insurance and DeviceENGCOLtd

0.38

Correlation Coefficient

DB Insurance  DeviceENGCOLtd

Weak diversification

The 3 months correlation between 005830 and DeviceENGCOLtd is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding DB Insurance Co and DeviceENGCOLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DeviceENGCOLtd and DB Insurance 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 DB Insurance Co are associated (or correlated) with DeviceENGCOLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DeviceENGCOLtd has no effect on the direction of DB Insurance i.e., DB Insurance and DeviceENGCOLtd go up and down completely randomly.

Pair Corralation between DB Insurance and DeviceENGCOLtd

Assuming the 90 days trading horizon DB Insurance Co is expected to generate 1.55 times more return on investment than DeviceENGCOLtd. However, DB Insurance is 1.55 times more volatile than DeviceENGCOLtd. It trades about -0.01 of its potential returns per unit of risk. DeviceENGCOLtd is currently generating about -0.13 per unit of risk. If you would invest  11,810,000  in DB Insurance Co on September 5, 2024 and sell it today you would lose (440,000) from holding DB Insurance Co or give up 3.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

DB Insurance Co  vs.  DeviceENGCOLtd

DB Insurance

Risk-Adjusted Performance

0 of 100

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.

DeviceENGCOLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DeviceENGCOLtd 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.

Pair Trading with DB Insurance and DeviceENGCOLtd

The main advantage of trading using opposite DB Insurance and DeviceENGCOLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DB Insurance position performs unexpectedly, DeviceENGCOLtd 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 DeviceENGCOLtd will offset losses from the drop in DeviceENGCOLtd's long position.

The idea behind DB Insurance Co and DeviceENGCOLtd 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..