Correlation Between Datagroup and Target Corp

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

By analyzing existing cross correlation between Datagroup SE and Target Corp, you can compare the effects of market volatilities on Datagroup and Target Corp 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 Datagroup with a short position of Target Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datagroup and Target Corp.

Diversification Opportunities for Datagroup and Target Corp

-0.7

Correlation Coefficient

Datagroup  Target Corp

Excellent diversification

The 3 months correlation between Datagroup and Target is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Datagroup SE and Target Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Corp and Datagroup 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 Datagroup SE are associated (or correlated) with Target Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Corp has no effect on the direction of Datagroup i.e., Datagroup and Target Corp go up and down completely randomly.

Pair Corralation between Datagroup and Target Corp

Assuming the 90 days trading horizon Datagroup SE is expected to generate 1.96 times more return on investment than Target Corp. However, Datagroup is 1.96 times more volatile than Target Corp. It trades about -0.02 of its potential returns per unit of risk. Target Corp is currently generating about -0.05 per unit of risk. If you would invest  4,705  in Datagroup SE on October 8, 2024 and sell it today you would lose (55.00) from holding Datagroup SE or give up 1.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

Datagroup SE  vs.  Target Corp

Datagroup SE

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Datagroup SE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Datagroup may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Target Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Target Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

Pair Trading with Datagroup and Target Corp

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

The idea behind Datagroup SE and Target Corp 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.