Correlation Between Datadog and PT Hexindo

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

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

Diversification Opportunities for Datadog and PT Hexindo

-0.73

Correlation Coefficient

Datadog  PT Hexindo

Pay attention - limited upside

The 3 months correlation between Datadog and HX1A is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Datadog and PT Hexindo Adiperkasa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Hexindo Adiperkasa and Datadog 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 Datadog are associated (or correlated) with PT Hexindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Hexindo Adiperkasa has no effect on the direction of Datadog i.e., Datadog and PT Hexindo go up and down completely randomly.

Pair Corralation between Datadog and PT Hexindo

Assuming the 90 days horizon Datadog is expected to under-perform the PT Hexindo. But the stock apears to be less risky and, when comparing its historical volatility, Datadog is 2.4 times less risky than PT Hexindo. The stock trades about -0.18 of its potential returns per unit of risk. The PT Hexindo Adiperkasa is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  27.00  in PT Hexindo Adiperkasa on October 10, 2024 and sell it today you would earn a total of  3.00  from holding PT Hexindo Adiperkasa or generate 11.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

Datadog  vs.  PT Hexindo Adiperkasa

Datadog

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Datadog are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Datadog reported solid returns over the last few months and may actually be approaching a breakup point.

PT Hexindo Adiperkasa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Hexindo Adiperkasa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PT Hexindo is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Datadog and PT Hexindo

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

The idea behind Datadog and PT Hexindo Adiperkasa 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.