Correlation Between Data Modul and Mastercard

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

Diversification Opportunities for Data Modul and Mastercard

-0.46

Correlation Coefficient

Data Modul  Mastercard

Very good diversification

The 3 months correlation between Data and Mastercard is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Data Modul AG and Mastercard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastercard 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 Mastercard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mastercard has no effect on the direction of Data Modul i.e., Data Modul and Mastercard go up and down completely randomly.

Pair Corralation between Data Modul and Mastercard

Assuming the 90 days trading horizon Data Modul AG is expected to under-perform the Mastercard. In addition to that, Data Modul is 1.56 times more volatile than Mastercard. It trades about -0.01 of its total potential returns per unit of risk. Mastercard is currently generating about -0.01 per unit of volatility. If you would invest  50,304  in Mastercard on December 23, 2024 and sell it today you would lose (839.00) from holding Mastercard or give up 1.67% 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.  Mastercard

Data Modul AG

Risk-Adjusted Performance

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 very healthy primary indicators, Data Modul is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Mastercard

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mastercard has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Mastercard is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Data Modul and Mastercard

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

The idea behind Data Modul AG and Mastercard 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.

Check out your portfolio center.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.