Correlation Between Datamatics Global and Dixon Technologies

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

Diversification Opportunities for Datamatics Global and Dixon Technologies

0.71

Correlation Coefficient

Datamatics Global  Dixon Technologies

Poor diversification

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

Pair Corralation between Datamatics Global and Dixon Technologies

Assuming the 90 days trading horizon Datamatics Global is expected to generate 4.5 times less return on investment than Dixon Technologies. In addition to that, Datamatics Global is 1.17 times more volatile than Dixon Technologies Limited. It trades about 0.03 of its total potential returns per unit of risk. Dixon Technologies Limited is currently generating about 0.15 per unit of volatility. If you would invest  532,810  in Dixon Technologies Limited on October 27, 2024 and sell it today you would earn a total of  1,025,680  from holding Dixon Technologies Limited or generate 192.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.34%
Values	Daily Returns

Datamatics Global Services  vs.  Dixon Technologies Limited

Datamatics Global

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Datamatics Global Services are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Datamatics Global unveiled solid returns over the last few months and may actually be approaching a breakup point.

Dixon Technologies

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dixon Technologies Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Dixon Technologies may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Datamatics Global and Dixon Technologies

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

The idea behind Datamatics Global Services and Dixon Technologies 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.