Correlation Between Datamatics Global and Chalet Hotels

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

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

Diversification Opportunities for Datamatics Global and Chalet Hotels

0.8

Correlation Coefficient

Datamatics Global  Chalet Hotels

Very poor diversification

The 3 months correlation between Datamatics and Chalet is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Datamatics Global Services and Chalet Hotels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chalet Hotels Limited and Datamatics Global 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 Datamatics Global Services are associated (or correlated) with Chalet Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chalet Hotels Limited has no effect on the direction of Datamatics Global i.e., Datamatics Global and Chalet Hotels go up and down completely randomly.

Pair Corralation between Datamatics Global and Chalet Hotels

Assuming the 90 days trading horizon Datamatics Global Services is expected to generate 0.99 times more return on investment than Chalet Hotels. However, Datamatics Global Services is 1.01 times less risky than Chalet Hotels. It trades about 0.1 of its potential returns per unit of risk. Chalet Hotels Limited is currently generating about 0.07 per unit of risk. If you would invest  61,715  in Datamatics Global Services on October 10, 2024 and sell it today you would earn a total of  7,975  from holding Datamatics Global Services or generate 12.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Datamatics Global Services  vs.  Chalet Hotels Limited

Datamatics Global

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Datamatics Global Services are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward indicators, Datamatics Global unveiled solid returns over the last few months and may actually be approaching a breakup point.

Chalet Hotels Limited

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chalet Hotels Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain essential indicators, Chalet Hotels may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Datamatics Global and Chalet Hotels

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

The idea behind Datamatics Global Services and Chalet Hotels Limited 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.