Correlation Between Dagang Nexchange and Dataprep Holdings

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

By analyzing existing cross correlation between Dagang Nexchange Bhd and Dataprep Holdings Bhd, you can compare the effects of market volatilities on Dagang Nexchange and Dataprep Holdings 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 Dagang Nexchange with a short position of Dataprep Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dagang Nexchange and Dataprep Holdings.

Diversification Opportunities for Dagang Nexchange and Dataprep Holdings

-0.2

Correlation Coefficient

Dagang Nexchange  Dataprep Holdings

Good diversification

The 3 months correlation between Dagang and Dataprep is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Dagang Nexchange Bhd and Dataprep Holdings Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dataprep Holdings Bhd and Dagang Nexchange 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 Dagang Nexchange Bhd are associated (or correlated) with Dataprep Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dataprep Holdings Bhd has no effect on the direction of Dagang Nexchange i.e., Dagang Nexchange and Dataprep Holdings go up and down completely randomly.

Pair Corralation between Dagang Nexchange and Dataprep Holdings

Assuming the 90 days trading horizon Dagang Nexchange Bhd is expected to generate 0.6 times more return on investment than Dataprep Holdings. However, Dagang Nexchange Bhd is 1.67 times less risky than Dataprep Holdings. It trades about -0.01 of its potential returns per unit of risk. Dataprep Holdings Bhd is currently generating about -0.07 per unit of risk. If you would invest  36.00  in Dagang Nexchange Bhd on September 3, 2024 and sell it today you would lose (1.00) from holding Dagang Nexchange Bhd or give up 2.78% of portfolio value over 90 days.

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

Dagang Nexchange Bhd  vs.  Dataprep Holdings Bhd

Dagang Nexchange Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dagang Nexchange Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Dagang Nexchange is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Dataprep Holdings Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dataprep Holdings Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Dagang Nexchange and Dataprep Holdings

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

The idea behind Dagang Nexchange Bhd and Dataprep Holdings Bhd 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.