Correlation Between DBS Group and Pioneer Bankcorp

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

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

Diversification Opportunities for DBS Group and Pioneer Bankcorp

0.86

Correlation Coefficient

DBS Group  Pioneer Bankcorp

Very poor diversification

The 3 months correlation between DBS and Pioneer is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding DBS Group Holdings and Pioneer Bankcorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer Bankcorp and DBS 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 DBS Group Holdings are associated (or correlated) with Pioneer Bankcorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer Bankcorp has no effect on the direction of DBS Group i.e., DBS Group and Pioneer Bankcorp go up and down completely randomly.

Pair Corralation between DBS Group and Pioneer Bankcorp

Assuming the 90 days horizon DBS Group Holdings is expected to generate 1.25 times more return on investment than Pioneer Bankcorp. However, DBS Group is 1.25 times more volatile than Pioneer Bankcorp. It trades about 0.16 of its potential returns per unit of risk. Pioneer Bankcorp is currently generating about 0.11 per unit of risk. If you would invest  8,005  in DBS Group Holdings on September 4, 2024 and sell it today you would earn a total of  4,679  from holding DBS Group Holdings or generate 58.45% return on investment over 90 days.

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

DBS Group Holdings  vs.  Pioneer Bankcorp

DBS Group Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DBS Group Holdings are ranked lower than 12 (%) 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.

Pioneer Bankcorp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pioneer Bankcorp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward-looking signals, Pioneer Bankcorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with DBS Group and Pioneer Bankcorp

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

The idea behind DBS Group Holdings and Pioneer Bankcorp 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.