Correlation Between DATAGROUP and CARSALES

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Can any of the company-specific risk be diversified away by investing in both DATAGROUP and CARSALES 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 CARSALES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DATAGROUP SE and CARSALESCOM, you can compare the effects of market volatilities on DATAGROUP and CARSALES 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 CARSALES. Check out your portfolio center. Please also check ongoing floating volatility patterns of DATAGROUP and CARSALES.

Diversification Opportunities for DATAGROUP and CARSALES

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  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between DATAGROUP and CARSALES

Assuming the 90 days trading horizon DATAGROUP SE is expected to generate 1.26 times more return on investment than CARSALES. However, DATAGROUP is 1.26 times more volatile than CARSALESCOM. It trades about 0.03 of its potential returns per unit of risk. CARSALESCOM is currently generating about -0.59 per unit of risk. If you would invest  4,650  in DATAGROUP SE on October 4, 2024 and sell it today you would earn a total of  30.00  from holding DATAGROUP SE or generate 0.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy94.74%
ValuesDaily Returns

DATAGROUP SE  vs.  CARSALESCOM

 Performance 
       Timeline  
DATAGROUP SE 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in DATAGROUP SE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical indicators, DATAGROUP may actually be approaching a critical reversion point that can send shares even higher in February 2025.
CARSALESCOM 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days CARSALESCOM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CARSALES is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

DATAGROUP and CARSALES Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with DATAGROUP and CARSALES

The main advantage of trading using opposite DATAGROUP and CARSALES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DATAGROUP position performs unexpectedly, CARSALES 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 CARSALES will offset losses from the drop in CARSALES's long position.
The idea behind DATAGROUP SE and CARSALESCOM 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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