Correlation Between DATA MODUL and DENSO

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

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

Diversification Opportunities for DATA MODUL and DENSO

0.33

Correlation Coefficient

DATA MODUL  DENSO

Weak diversification

The 3 months correlation between DATA and DENSO is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding DATA MODUL and DENSO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DENSO and DATA MODUL 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 DATA MODUL are associated (or correlated) with DENSO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DENSO has no effect on the direction of DATA MODUL i.e., DATA MODUL and DENSO go up and down completely randomly.

Pair Corralation between DATA MODUL and DENSO

Assuming the 90 days trading horizon DATA MODUL is expected to under-perform the DENSO. In addition to that, DATA MODUL is 3.1 times more volatile than DENSO. It trades about -0.07 of its total potential returns per unit of risk. DENSO is currently generating about -0.04 per unit of volatility. If you would invest  1,327  in DENSO on October 25, 2024 and sell it today you would lose (8.00) from holding DENSO or give up 0.6% of portfolio value over 90 days.

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

DATA MODUL   vs.  DENSO

DATA MODUL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DATA MODUL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

DENSO

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DENSO are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, DENSO is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with DATA MODUL and DENSO

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

The idea behind DATA MODUL and DENSO 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.