Correlation Between DB Financial and GAMEVIL

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Can any of the company-specific risk be diversified away by investing in both DB Financial and GAMEVIL 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 DB Financial and GAMEVIL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DB Financial Investment and GAMEVIL, you can compare the effects of market volatilities on DB Financial and GAMEVIL 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 DB Financial with a short position of GAMEVIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of DB Financial and GAMEVIL.

Diversification Opportunities for DB Financial and GAMEVIL

0.42
  Correlation Coefficient

Very weak diversification

The 3 months correlation between 016610 and GAMEVIL is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding DB Financial Investment and GAMEVIL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMEVIL and DB 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 DB Financial Investment are associated (or correlated) with GAMEVIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMEVIL has no effect on the direction of DB Financial i.e., DB Financial and GAMEVIL go up and down completely randomly.

Pair Corralation between DB Financial and GAMEVIL

Assuming the 90 days trading horizon DB Financial Investment is expected to generate 0.43 times more return on investment than GAMEVIL. However, DB Financial Investment is 2.35 times less risky than GAMEVIL. It trades about 0.32 of its potential returns per unit of risk. GAMEVIL is currently generating about -0.1 per unit of risk. If you would invest  404,000  in DB Financial Investment on February 14, 2024 and sell it today you would earn a total of  21,000  from holding DB Financial Investment or generate 5.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

DB Financial Investment  vs.  GAMEVIL

 Performance 
       Timeline  
DB Financial Investment 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in DB Financial Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, DB Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
GAMEVIL 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days GAMEVIL 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 June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

DB Financial and GAMEVIL Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with DB Financial and GAMEVIL

The main advantage of trading using opposite DB Financial and GAMEVIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DB Financial position performs unexpectedly, GAMEVIL 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 GAMEVIL will offset losses from the drop in GAMEVIL's long position.
The idea behind DB Financial Investment and GAMEVIL 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.
Check out your portfolio center.
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

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