Correlation Between Agro Tech and Datamatics Global

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

By analyzing existing cross correlation between Agro Tech Foods and Datamatics Global Services, you can compare the effects of market volatilities on Agro Tech and Datamatics Global 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 Agro Tech with a short position of Datamatics Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agro Tech and Datamatics Global.

Diversification Opportunities for Agro Tech and Datamatics Global

0.0

Correlation Coefficient

Agro Tech  Datamatics Global

Pay attention - limited upside

The 3 months correlation between Agro and Datamatics is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Agro Tech Foods and Datamatics Global Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datamatics Global and Agro Tech 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 Agro Tech Foods are associated (or correlated) with Datamatics Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datamatics Global has no effect on the direction of Agro Tech i.e., Agro Tech and Datamatics Global go up and down completely randomly.

Pair Corralation between Agro Tech and Datamatics Global

Assuming the 90 days trading horizon Agro Tech is expected to generate 5.58 times less return on investment than Datamatics Global. But when comparing it to its historical volatility, Agro Tech Foods is 1.29 times less risky than Datamatics Global. It trades about 0.01 of its potential returns per unit of risk. Datamatics Global Services is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  29,358  in Datamatics Global Services on October 21, 2024 and sell it today you would earn a total of  33,672  from holding Datamatics Global Services or generate 114.69% return on investment over 90 days.

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

Agro Tech Foods  vs.  Datamatics Global Services

Agro Tech Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agro Tech Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Agro Tech is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Datamatics Global

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Agro Tech and Datamatics Global

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

The idea behind Agro Tech Foods and Datamatics Global Services 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.