Correlation Between Data Modul and Information Services

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

By analyzing existing cross correlation between Data Modul AG and Information Services International Dentsu, you can compare the effects of market volatilities on Data Modul and Information Services 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 Information Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Data Modul and Information Services.

Diversification Opportunities for Data Modul and Information Services

-0.47

Correlation Coefficient

Data Modul  Information Services

Very good diversification

The 3 months correlation between Data and Information is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Data Modul AG and Information Services Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Services 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 AG are associated (or correlated) with Information Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Services has no effect on the direction of Data Modul i.e., Data Modul and Information Services go up and down completely randomly.

Pair Corralation between Data Modul and Information Services

Assuming the 90 days trading horizon Data Modul AG is expected to generate 1.49 times more return on investment than Information Services. However, Data Modul is 1.49 times more volatile than Information Services International Dentsu. It trades about -0.05 of its potential returns per unit of risk. Information Services International Dentsu is currently generating about -0.15 per unit of risk. If you would invest  2,600  in Data Modul AG on October 25, 2024 and sell it today you would lose (60.00) from holding Data Modul AG or give up 2.31% of portfolio value over 90 days.

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

Data Modul AG  vs.  Information Services Internati

Data Modul AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Data Modul AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Information Services

Risk-Adjusted Performance

4 of 100

Modest

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

Pair Trading with Data Modul and Information Services

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

The idea behind Data Modul AG and Information Services International Dentsu 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.