Correlation Between APA and Datadog,

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

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

Diversification Opportunities for APA and Datadog,

-0.35

Correlation Coefficient

APA  Datadog,

Very good diversification

The 3 months correlation between APA and Datadog, is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding APA Corp. and Datadog, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datadog, and APA 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 APA Corporation 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 APA i.e., APA and Datadog, go up and down completely randomly.

Pair Corralation between APA and Datadog,

Assuming the 90 days trading horizon APA Corporation is expected to under-perform the Datadog,. In addition to that, APA is 1.09 times more volatile than Datadog,. It trades about -0.01 of its total potential returns per unit of risk. Datadog, is currently generating about 0.08 per unit of volatility. If you would invest  5,663  in Datadog, on October 5, 2024 and sell it today you would earn a total of  3,130  from holding Datadog, or generate 55.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	80.75%
Values	Daily Returns

APA Corp.  vs.  Datadog,

APA Corporation

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days APA Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, APA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Datadog,

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Datadog, are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Datadog, sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with APA and Datadog,

The main advantage of trading using opposite APA and Datadog, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APA 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 APA Corporation 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.