Correlation Between Datasonic Group and HeiTech Padu

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

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

Diversification Opportunities for Datasonic Group and HeiTech Padu

0.25

Correlation Coefficient

Datasonic Group  HeiTech Padu

Modest diversification

The 3 months correlation between Datasonic and HeiTech is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Datasonic Group Bhd and HeiTech Padu Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HeiTech Padu Bhd and Datasonic Group 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 Datasonic Group Bhd are associated (or correlated) with HeiTech Padu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HeiTech Padu Bhd has no effect on the direction of Datasonic Group i.e., Datasonic Group and HeiTech Padu go up and down completely randomly.

Pair Corralation between Datasonic Group and HeiTech Padu

Assuming the 90 days trading horizon Datasonic Group Bhd is expected to generate 0.72 times more return on investment than HeiTech Padu. However, Datasonic Group Bhd is 1.4 times less risky than HeiTech Padu. It trades about -0.06 of its potential returns per unit of risk. HeiTech Padu Bhd is currently generating about -0.23 per unit of risk. If you would invest  44.00  in Datasonic Group Bhd on October 20, 2024 and sell it today you would lose (4.00) from holding Datasonic Group Bhd or give up 9.09% of portfolio value over 90 days.

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

Datasonic Group Bhd  vs.  HeiTech Padu Bhd

Datasonic Group Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Datasonic Group Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

HeiTech Padu Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HeiTech Padu 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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Datasonic Group and HeiTech Padu

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

The idea behind Datasonic Group Bhd and HeiTech Padu 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.