Correlation Between Datagroup and Impax Environmental

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

By analyzing existing cross correlation between Datagroup SE and Impax Environmental Markets, you can compare the effects of market volatilities on Datagroup and Impax Environmental 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 Impax Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datagroup and Impax Environmental.

Diversification Opportunities for Datagroup and Impax Environmental

-0.54

Correlation Coefficient

Datagroup  Impax Environmental

Excellent diversification

The 3 months correlation between Datagroup and Impax is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Datagroup SE and Impax Environmental Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impax Environmental 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 Impax Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impax Environmental has no effect on the direction of Datagroup i.e., Datagroup and Impax Environmental go up and down completely randomly.

Pair Corralation between Datagroup and Impax Environmental

Assuming the 90 days trading horizon Datagroup SE is expected to generate 2.96 times more return on investment than Impax Environmental. However, Datagroup is 2.96 times more volatile than Impax Environmental Markets. It trades about 0.03 of its potential returns per unit of risk. Impax Environmental Markets is currently generating about 0.08 per unit of risk. If you would invest  4,245  in Datagroup SE on October 25, 2024 and sell it today you would earn a total of  105.00  from holding Datagroup SE or generate 2.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Datagroup SE  vs.  Impax Environmental Markets

Datagroup SE

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Datagroup SE are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Datagroup is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Impax Environmental

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Impax Environmental Markets are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Impax Environmental is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Datagroup and Impax Environmental

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

The idea behind Datagroup SE and Impax Environmental Markets 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.