Correlation Between Data Modul and SEKISUI CHEMICAL

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

Diversification Opportunities for Data Modul and SEKISUI CHEMICAL

-0.1

Correlation Coefficient

Data Modul  SEKISUI CHEMICAL

Good diversification

The 3 months correlation between Data and SEKISUI is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Data Modul AG and SEKISUI CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEKISUI CHEMICAL 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 SEKISUI CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEKISUI CHEMICAL has no effect on the direction of Data Modul i.e., Data Modul and SEKISUI CHEMICAL go up and down completely randomly.

Pair Corralation between Data Modul and SEKISUI CHEMICAL

Assuming the 90 days trading horizon Data Modul AG is expected to under-perform the SEKISUI CHEMICAL. In addition to that, Data Modul is 1.39 times more volatile than SEKISUI CHEMICAL. It trades about -0.04 of its total potential returns per unit of risk. SEKISUI CHEMICAL is currently generating about 0.06 per unit of volatility. If you would invest  1,370  in SEKISUI CHEMICAL on October 9, 2024 and sell it today you would earn a total of  260.00  from holding SEKISUI CHEMICAL or generate 18.98% 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.  SEKISUI CHEMICAL

Data Modul AG

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Data Modul AG are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Data Modul is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

SEKISUI CHEMICAL

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SEKISUI CHEMICAL are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, SEKISUI CHEMICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Data Modul and SEKISUI CHEMICAL

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

The idea behind Data Modul AG and SEKISUI CHEMICAL 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.