Correlation Between InPlay Oil and DATAGROUP

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

By analyzing existing cross correlation between InPlay Oil Corp and DATAGROUP SE, you can compare the effects of market volatilities on InPlay Oil and DATAGROUP 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 InPlay Oil with a short position of DATAGROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and DATAGROUP.

Diversification Opportunities for InPlay Oil and DATAGROUP

-0.45

Correlation Coefficient

InPlay Oil  DATAGROUP

Very good diversification

The 3 months correlation between InPlay and DATAGROUP is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp and DATAGROUP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATAGROUP SE and InPlay Oil 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 InPlay Oil Corp are associated (or correlated) with DATAGROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATAGROUP SE has no effect on the direction of InPlay Oil i.e., InPlay Oil and DATAGROUP go up and down completely randomly.

Pair Corralation between InPlay Oil and DATAGROUP

Assuming the 90 days trading horizon InPlay Oil Corp is expected to generate 1.94 times more return on investment than DATAGROUP. However, InPlay Oil is 1.94 times more volatile than DATAGROUP SE. It trades about 0.12 of its potential returns per unit of risk. DATAGROUP SE is currently generating about -0.03 per unit of risk. If you would invest  112.00  in InPlay Oil Corp on October 10, 2024 and sell it today you would earn a total of  8.00  from holding InPlay Oil Corp or generate 7.14% return on investment over 90 days.

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

InPlay Oil Corp  vs.  DATAGROUP SE

InPlay Oil Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days InPlay Oil Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

DATAGROUP SE

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DATAGROUP SE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical indicators, DATAGROUP may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with InPlay Oil and DATAGROUP

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

The idea behind InPlay Oil Corp and DATAGROUP SE 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.