Correlation Between BS Group and DGB Group

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

By analyzing existing cross correlation between BS Group SA and DGB Group NV, you can compare the effects of market volatilities on BS Group and DGB 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 BS Group with a short position of DGB Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of BS Group and DGB Group.

Diversification Opportunities for BS Group and DGB Group

-0.72

Correlation Coefficient

BS Group  DGB Group

Pay attention - limited upside

The 3 months correlation between BSGR and DGB is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding BS Group SA and DGB Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DGB Group NV and BS Group 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 BS Group SA are associated (or correlated) with DGB Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DGB Group NV has no effect on the direction of BS Group i.e., BS Group and DGB Group go up and down completely randomly.

Pair Corralation between BS Group and DGB Group

Assuming the 90 days trading horizon BS Group is expected to generate 3.02 times less return on investment than DGB Group. In addition to that, BS Group is 1.28 times more volatile than DGB Group NV. It trades about 0.07 of its total potential returns per unit of risk. DGB Group NV is currently generating about 0.26 per unit of volatility. If you would invest  78.00  in DGB Group NV on September 20, 2024 and sell it today you would earn a total of  10.00  from holding DGB Group NV or generate 12.82% return on investment over 90 days.

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

BS Group SA  vs.  DGB Group NV

BS Group SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BS Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

DGB Group NV

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DGB Group NV are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, DGB Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BS Group and DGB Group

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

The idea behind BS Group SA and DGB Group NV 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.