Correlation Between DATA and Hivemapper

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

By analyzing existing cross correlation between DATA and Hivemapper, you can compare the effects of market volatilities on DATA and Hivemapper 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 with a short position of Hivemapper. Check out your portfolio center. Please also check ongoing floating volatility patterns of DATA and Hivemapper.

Diversification Opportunities for DATA and Hivemapper

0.42

Correlation Coefficient

DATA  Hivemapper

Very weak diversification

The 3 months correlation between DATA and Hivemapper is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding DATA and Hivemapper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hivemapper and DATA 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 are associated (or correlated) with Hivemapper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hivemapper has no effect on the direction of DATA i.e., DATA and Hivemapper go up and down completely randomly.

Pair Corralation between DATA and Hivemapper

Assuming the 90 days trading horizon DATA is expected to generate 0.86 times more return on investment than Hivemapper. However, DATA is 1.17 times less risky than Hivemapper. It trades about 0.1 of its potential returns per unit of risk. Hivemapper is currently generating about 0.02 per unit of risk. If you would invest  3.81  in DATA on September 1, 2024 and sell it today you would earn a total of  1.17  from holding DATA or generate 30.71% return on investment over 90 days.

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

DATA  vs.  Hivemapper

DATA

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DATA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, DATA exhibited solid returns over the last few months and may actually be approaching a breakup point.

Hivemapper

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hivemapper are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Hivemapper may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with DATA and Hivemapper

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

The idea behind DATA and Hivemapper 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.