Correlation Between Data Modul and Transurban

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

Diversification Opportunities for Data Modul and Transurban

-0.74

Correlation Coefficient

Data Modul  Transurban

Pay attention - limited upside

The 3 months correlation between Data and Transurban is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Data Modul AG and Transurban Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transurban Group 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 Transurban. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transurban Group has no effect on the direction of Data Modul i.e., Data Modul and Transurban go up and down completely randomly.

Pair Corralation between Data Modul and Transurban

Assuming the 90 days trading horizon Data Modul AG is expected to under-perform the Transurban. In addition to that, Data Modul is 1.72 times more volatile than Transurban Group. It trades about -0.07 of its total potential returns per unit of risk. Transurban Group is currently generating about 0.08 per unit of volatility. If you would invest  764.00  in Transurban Group on October 24, 2024 and sell it today you would earn a total of  42.00  from holding Transurban Group or generate 5.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Data Modul AG  vs.  Transurban Group

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 uncertain 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.

Transurban Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Transurban Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Transurban is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Data Modul and Transurban

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

The idea behind Data Modul AG and Transurban Group 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.