Correlation Between DEUTSCHE and Hf Foods

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

By analyzing existing cross correlation between DEUTSCHE BANK AG and Hf Foods Group, you can compare the effects of market volatilities on DEUTSCHE and Hf Foods 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 DEUTSCHE with a short position of Hf Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of DEUTSCHE and Hf Foods.

Diversification Opportunities for DEUTSCHE and Hf Foods

0.38

Correlation Coefficient

DEUTSCHE  Hf Foods

Weak diversification

The 3 months correlation between DEUTSCHE and HFFG is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding DEUTSCHE BANK AG and Hf Foods Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hf Foods Group and DEUTSCHE 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 DEUTSCHE BANK AG are associated (or correlated) with Hf Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hf Foods Group has no effect on the direction of DEUTSCHE i.e., DEUTSCHE and Hf Foods go up and down completely randomly.

Pair Corralation between DEUTSCHE and Hf Foods

Assuming the 90 days trading horizon DEUTSCHE BANK AG is expected to generate 0.04 times more return on investment than Hf Foods. However, DEUTSCHE BANK AG is 23.81 times less risky than Hf Foods. It trades about 0.0 of its potential returns per unit of risk. Hf Foods Group is currently generating about -0.03 per unit of risk. If you would invest  9,637  in DEUTSCHE BANK AG on September 27, 2024 and sell it today you would lose (1.00) from holding DEUTSCHE BANK AG or give up 0.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	76.56%
Values	Daily Returns

DEUTSCHE BANK AG  vs.  Hf Foods Group

DEUTSCHE BANK AG

Risk-Adjusted Performance

0 of 100

Very Weak

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

Hf Foods Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hf Foods Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Hf Foods is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with DEUTSCHE and Hf Foods

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

The idea behind DEUTSCHE BANK AG and Hf Foods Group 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.