Correlation Between Datamatics Global and Eros International

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

Diversification Opportunities for Datamatics Global and Eros International

-0.5

Correlation Coefficient

Datamatics Global  Eros International

Very good diversification

The 3 months correlation between Datamatics and Eros is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Datamatics Global Services and Eros International Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eros International Media 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 Eros International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eros International Media has no effect on the direction of Datamatics Global i.e., Datamatics Global and Eros International go up and down completely randomly.

Pair Corralation between Datamatics Global and Eros International

Assuming the 90 days trading horizon Datamatics Global Services is expected to generate 1.04 times more return on investment than Eros International. However, Datamatics Global is 1.04 times more volatile than Eros International Media. It trades about 0.07 of its potential returns per unit of risk. Eros International Media is currently generating about -0.04 per unit of risk. If you would invest  29,611  in Datamatics Global Services on October 25, 2024 and sell it today you would earn a total of  37,364  from holding Datamatics Global Services or generate 126.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.39%
Values	Daily Returns

Datamatics Global Services  vs.  Eros International Media

Datamatics Global

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Datamatics Global Services are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady forward indicators, Datamatics Global unveiled solid returns over the last few months and may actually be approaching a breakup point.

Eros International Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eros International Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Datamatics Global and Eros International

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

The idea behind Datamatics Global Services and Eros International Media 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.