Correlation Between Cornerstone Financial and DBS Group

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

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

Diversification Opportunities for Cornerstone Financial and DBS Group

0.84

Correlation Coefficient

Cornerstone Financial  DBS Group

Very poor diversification

The 3 months correlation between Cornerstone and DBS is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Cornerstone Financial and DBS Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DBS Group Holdings and Cornerstone Financial 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 Cornerstone Financial are associated (or correlated) with DBS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DBS Group Holdings has no effect on the direction of Cornerstone Financial i.e., Cornerstone Financial and DBS Group go up and down completely randomly.

Pair Corralation between Cornerstone Financial and DBS Group

If you would invest  11,538  in DBS Group Holdings on September 13, 2024 and sell it today you would earn a total of  1,497  from holding DBS Group Holdings or generate 12.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	1.59%
Values	Daily Returns

Cornerstone Financial  vs.  DBS Group Holdings

Cornerstone Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cornerstone Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Cornerstone Financial is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

DBS Group Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DBS Group Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, DBS Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cornerstone Financial and DBS Group

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

The idea behind Cornerstone Financial and DBS Group Holdings 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.