Correlation Between Dataproces Group and Fast Ejendom

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

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

Diversification Opportunities for Dataproces Group and Fast Ejendom

0.71

Correlation Coefficient

Dataproces Group  Fast Ejendom

Poor diversification

The 3 months correlation between Dataproces and Fast is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Dataproces Group AS and Fast Ejendom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Ejendom and Dataproces Group 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 Dataproces Group AS are associated (or correlated) with Fast Ejendom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Ejendom has no effect on the direction of Dataproces Group i.e., Dataproces Group and Fast Ejendom go up and down completely randomly.

Pair Corralation between Dataproces Group and Fast Ejendom

Assuming the 90 days trading horizon Dataproces Group AS is expected to generate 1.27 times more return on investment than Fast Ejendom. However, Dataproces Group is 1.27 times more volatile than Fast Ejendom. It trades about 0.26 of its potential returns per unit of risk. Fast Ejendom is currently generating about 0.11 per unit of risk. If you would invest  590.00  in Dataproces Group AS on December 25, 2024 and sell it today you would earn a total of  260.00  from holding Dataproces Group AS or generate 44.07% return on investment over 90 days.

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

Dataproces Group AS  vs.  Fast Ejendom

Dataproces Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dataproces Group AS are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Dataproces Group displayed solid returns over the last few months and may actually be approaching a breakup point.

Fast Ejendom

Risk-Adjusted Performance

OK

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

Pair Trading with Dataproces Group and Fast Ejendom

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

The idea behind Dataproces Group AS and Fast Ejendom 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.