Correlation Between DATAGROUP and AIB Group

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

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

Diversification Opportunities for DATAGROUP and AIB Group

0.26

Correlation Coefficient

DATAGROUP  AIB Group

Modest diversification

The 3 months correlation between DATAGROUP and AIB is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding DATAGROUP SE and AIB Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIB Group plc and DATAGROUP 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 DATAGROUP SE are associated (or correlated) with AIB Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIB Group plc has no effect on the direction of DATAGROUP i.e., DATAGROUP and AIB Group go up and down completely randomly.

Pair Corralation between DATAGROUP and AIB Group

Assuming the 90 days trading horizon DATAGROUP is expected to generate 1.39 times less return on investment than AIB Group. In addition to that, DATAGROUP is 1.21 times more volatile than AIB Group plc. It trades about 0.04 of its total potential returns per unit of risk. AIB Group plc is currently generating about 0.06 per unit of volatility. If you would invest  506.00  in AIB Group plc on October 14, 2024 and sell it today you would earn a total of  35.00  from holding AIB Group plc or generate 6.92% return on investment over 90 days.

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

DATAGROUP SE  vs.  AIB Group plc

DATAGROUP SE

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DATAGROUP SE are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, DATAGROUP is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

AIB Group plc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AIB Group plc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, AIB Group may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with DATAGROUP and AIB Group

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

The idea behind DATAGROUP SE and AIB Group plc 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.