Correlation Between Dataprep Holdings and ECM Libra

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

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

Diversification Opportunities for Dataprep Holdings and ECM Libra

0.38

Correlation Coefficient

Dataprep Holdings  ECM Libra

Weak diversification

The 3 months correlation between Dataprep and ECM is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Dataprep Holdings Bhd and ECM Libra Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECM Libra Financial and Dataprep Holdings 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 Dataprep Holdings Bhd are associated (or correlated) with ECM Libra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECM Libra Financial has no effect on the direction of Dataprep Holdings i.e., Dataprep Holdings and ECM Libra go up and down completely randomly.

Pair Corralation between Dataprep Holdings and ECM Libra

Assuming the 90 days trading horizon Dataprep Holdings Bhd is expected to under-perform the ECM Libra. In addition to that, Dataprep Holdings is 1.13 times more volatile than ECM Libra Financial. It trades about -0.18 of its total potential returns per unit of risk. ECM Libra Financial is currently generating about 0.19 per unit of volatility. If you would invest  18.00  in ECM Libra Financial on October 8, 2024 and sell it today you would earn a total of  2.00  from holding ECM Libra Financial or generate 11.11% return on investment over 90 days.

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

Dataprep Holdings Bhd  vs.  ECM Libra Financial

Dataprep Holdings Bhd

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dataprep Holdings Bhd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Dataprep Holdings is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

ECM Libra Financial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ECM Libra Financial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, ECM Libra may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Dataprep Holdings and ECM Libra

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

The idea behind Dataprep Holdings Bhd and ECM Libra Financial 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.

Check out your portfolio center.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..