Correlation Between DATAGROUP and TFS FINANCIAL

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

By analyzing existing cross correlation between DATAGROUP SE and TFS FINANCIAL, you can compare the effects of market volatilities on DATAGROUP and TFS FINANCIAL 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 TFS FINANCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of DATAGROUP and TFS FINANCIAL.

Diversification Opportunities for DATAGROUP and TFS FINANCIAL

0.1

Correlation Coefficient

DATAGROUP  TFS FINANCIAL

Average diversification

The 3 months correlation between DATAGROUP and TFS is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding DATAGROUP SE and TFS FINANCIAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFS FINANCIAL 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 TFS FINANCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TFS FINANCIAL has no effect on the direction of DATAGROUP i.e., DATAGROUP and TFS FINANCIAL go up and down completely randomly.

Pair Corralation between DATAGROUP and TFS FINANCIAL

Assuming the 90 days trading horizon DATAGROUP SE is expected to generate 1.89 times more return on investment than TFS FINANCIAL. However, DATAGROUP is 1.89 times more volatile than TFS FINANCIAL. It trades about -0.07 of its potential returns per unit of risk. TFS FINANCIAL is currently generating about -0.32 per unit of risk. If you would invest  4,350  in DATAGROUP SE on December 10, 2024 and sell it today you would lose (200.00) from holding DATAGROUP SE or give up 4.6% of portfolio value over 90 days.

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

DATAGROUP SE  vs.  TFS FINANCIAL

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 latest uncertain performance, the Stock's technical indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

TFS FINANCIAL

Risk-Adjusted Performance

Very Weak

Over the last 90 days TFS FINANCIAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with DATAGROUP and TFS FINANCIAL

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

The idea behind DATAGROUP SE and TFS FINANCIAL 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.