Correlation Between DATAGROUP and CAIRN HOMES

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

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

Diversification Opportunities for DATAGROUP and CAIRN HOMES

0.46

Correlation Coefficient

DATAGROUP  CAIRN HOMES

Very weak diversification

The 3 months correlation between DATAGROUP and CAIRN is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding DATAGROUP SE and CAIRN HOMES EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAIRN HOMES EO 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 CAIRN HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAIRN HOMES EO has no effect on the direction of DATAGROUP i.e., DATAGROUP and CAIRN HOMES go up and down completely randomly.

Pair Corralation between DATAGROUP and CAIRN HOMES

Assuming the 90 days trading horizon DATAGROUP SE is expected to generate 1.13 times more return on investment than CAIRN HOMES. However, DATAGROUP is 1.13 times more volatile than CAIRN HOMES EO. It trades about -0.02 of its potential returns per unit of risk. CAIRN HOMES EO is currently generating about -0.08 per unit of risk. If you would invest  4,528  in DATAGROUP SE on December 23, 2024 and sell it today you would lose (223.00) from holding DATAGROUP SE or give up 4.92% of portfolio value over 90 days.

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

DATAGROUP SE  vs.  CAIRN HOMES EO

DATAGROUP SE

Risk-Adjusted Performance

Very Weak

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

CAIRN HOMES EO

Risk-Adjusted Performance

Very Weak

Over the last 90 days CAIRN HOMES EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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 DATAGROUP and CAIRN HOMES

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

The idea behind DATAGROUP SE and CAIRN HOMES EO 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.