Correlation Between PH Tech and DB Financial

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

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

Diversification Opportunities for PH Tech and DB Financial

0.68

Correlation Coefficient

PH Tech  DB Financial

Poor diversification

The 3 months correlation between 239890 and 016610 is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding PH Tech Co and DB Financial Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DB Financial Investment and PH Tech 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 PH Tech Co are associated (or correlated) with DB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DB Financial Investment has no effect on the direction of PH Tech i.e., PH Tech and DB Financial go up and down completely randomly.

Pair Corralation between PH Tech and DB Financial

Assuming the 90 days trading horizon PH Tech Co is expected to under-perform the DB Financial. In addition to that, PH Tech is 2.0 times more volatile than DB Financial Investment. It trades about -0.05 of its total potential returns per unit of risk. DB Financial Investment is currently generating about -0.08 per unit of volatility. If you would invest  599,000  in DB Financial Investment on September 23, 2024 and sell it today you would lose (72,000) from holding DB Financial Investment or give up 12.02% of portfolio value over 90 days.

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

PH Tech Co  vs.  DB Financial Investment

PH Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PH Tech Co 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.

DB Financial Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DB Financial Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with PH Tech and DB Financial

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

The idea behind PH Tech Co and DB Financial Investment 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.