Correlation Between Data Modul and Kingfisher Plc

Can any of the company-specific risk be diversified away by investing in both Data Modul and Kingfisher Plc 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 Kingfisher Plc 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 Kingfisher plc, you can compare the effects of market volatilities on Data Modul and Kingfisher Plc 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 Kingfisher Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Data Modul and Kingfisher Plc.

Diversification Opportunities for Data Modul and Kingfisher Plc

-0.21

Correlation Coefficient

Data Modul  Kingfisher Plc

Very good diversification

The 3 months correlation between Data and Kingfisher is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Data Modul AG and Kingfisher plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingfisher plc 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 Kingfisher Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingfisher plc has no effect on the direction of Data Modul i.e., Data Modul and Kingfisher Plc go up and down completely randomly.

Pair Corralation between Data Modul and Kingfisher Plc

Assuming the 90 days trading horizon Data Modul AG is expected to under-perform the Kingfisher Plc. In addition to that, Data Modul is 1.21 times more volatile than Kingfisher plc. It trades about -0.05 of its total potential returns per unit of risk. Kingfisher plc is currently generating about 0.02 per unit of volatility. If you would invest  277.00  in Kingfisher plc on October 4, 2024 and sell it today you would earn a total of  26.00  from holding Kingfisher plc or generate 9.39% return on investment over 90 days.

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

Data Modul AG  vs.  Kingfisher plc

Data Modul AG

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Data Modul AG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain primary indicators, Data Modul may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Kingfisher plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kingfisher plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Data Modul and Kingfisher Plc

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

The idea behind Data Modul AG and Kingfisher plc 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.