Correlation Between Datametrex and M/I Homes

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

By analyzing existing cross correlation between Datametrex AI Limited and MI Homes, you can compare the effects of market volatilities on Datametrex and M/I Homes 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 Datametrex with a short position of M/I Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datametrex and M/I Homes.

Diversification Opportunities for Datametrex and M/I Homes

-0.15

Correlation Coefficient

Datametrex  M/I Homes

Good diversification

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

Pair Corralation between Datametrex and M/I Homes

Assuming the 90 days horizon Datametrex AI Limited is expected to generate 47.83 times more return on investment than M/I Homes. However, Datametrex is 47.83 times more volatile than MI Homes. It trades about 0.3 of its potential returns per unit of risk. MI Homes is currently generating about -0.19 per unit of risk. If you would invest  0.24  in Datametrex AI Limited on September 22, 2024 and sell it today you would earn a total of  0.26  from holding Datametrex AI Limited or generate 108.33% return on investment over 90 days.

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

Datametrex AI Limited  vs.  MI Homes

Datametrex AI Limited

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Datametrex AI Limited are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Datametrex reported solid returns over the last few months and may actually be approaching a breakup point.

M/I Homes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MI Homes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady 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.

Pair Trading with Datametrex and M/I Homes

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

The idea behind Datametrex AI Limited and MI Homes 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.