Correlation Between KRISPY KREME and Datadog

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

By analyzing existing cross correlation between KRISPY KREME DL 01 and Datadog, you can compare the effects of market volatilities on KRISPY KREME and Datadog 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 KRISPY KREME with a short position of Datadog. Check out your portfolio center. Please also check ongoing floating volatility patterns of KRISPY KREME and Datadog.

Diversification Opportunities for KRISPY KREME and Datadog

-0.15

Correlation Coefficient

KRISPY KREME  Datadog

Good diversification

The 3 months correlation between KRISPY and Datadog is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding KRISPY KREME DL 01 and Datadog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datadog and KRISPY KREME 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 KRISPY KREME DL 01 are associated (or correlated) with Datadog. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datadog has no effect on the direction of KRISPY KREME i.e., KRISPY KREME and Datadog go up and down completely randomly.

Pair Corralation between KRISPY KREME and Datadog

Assuming the 90 days horizon KRISPY KREME DL 01 is expected to under-perform the Datadog. But the stock apears to be less risky and, when comparing its historical volatility, KRISPY KREME DL 01 is 1.03 times less risky than Datadog. The stock trades about -0.04 of its potential returns per unit of risk. The Datadog is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  9,783  in Datadog on September 16, 2024 and sell it today you would earn a total of  4,817  from holding Datadog or generate 49.24% return on investment over 90 days.

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

KRISPY KREME DL 01  vs.  Datadog

KRISPY KREME DL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KRISPY KREME DL 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Datadog

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Datadog are ranked lower than 19 (%) 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.

Pair Trading with KRISPY KREME and Datadog

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

The idea behind KRISPY KREME DL 01 and Datadog 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.