Correlation Between PJ Metal and Dgb Financial

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

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

Diversification Opportunities for PJ Metal and Dgb Financial

-0.57

Correlation Coefficient

PJ Metal  Dgb Financial

Excellent diversification

The 3 months correlation between 128660 and Dgb is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding PJ Metal Co and Dgb Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dgb Financial and PJ Metal 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 PJ Metal Co are associated (or correlated) with Dgb Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dgb Financial has no effect on the direction of PJ Metal i.e., PJ Metal and Dgb Financial go up and down completely randomly.

Pair Corralation between PJ Metal and Dgb Financial

Assuming the 90 days trading horizon PJ Metal is expected to generate 1.09 times less return on investment than Dgb Financial. In addition to that, PJ Metal is 2.12 times more volatile than Dgb Financial. It trades about 0.02 of its total potential returns per unit of risk. Dgb Financial is currently generating about 0.04 per unit of volatility. If you would invest  678,037  in Dgb Financial on September 26, 2024 and sell it today you would earn a total of  166,963  from holding Dgb Financial or generate 24.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

PJ Metal Co  vs.  Dgb Financial

PJ Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PJ Metal Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PJ Metal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dgb Financial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dgb Financial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Dgb Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PJ Metal and Dgb Financial

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

The idea behind PJ Metal Co and Dgb Financial 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..