Correlation Between Datamatics Global and SAL Steel

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

Diversification Opportunities for Datamatics Global and SAL Steel

-0.26

Correlation Coefficient

Datamatics Global  SAL Steel

Very good diversification

The 3 months correlation between Datamatics and SAL is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Datamatics Global Services and SAL Steel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAL Steel 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 SAL Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAL Steel Limited has no effect on the direction of Datamatics Global i.e., Datamatics Global and SAL Steel go up and down completely randomly.

Pair Corralation between Datamatics Global and SAL Steel

Assuming the 90 days trading horizon Datamatics Global Services is expected to generate 0.87 times more return on investment than SAL Steel. However, Datamatics Global Services is 1.14 times less risky than SAL Steel. It trades about 0.09 of its potential returns per unit of risk. SAL Steel Limited is currently generating about -0.1 per unit of risk. If you would invest  62,025  in Datamatics Global Services on October 9, 2024 and sell it today you would earn a total of  7,665  from holding Datamatics Global Services or generate 12.36% return on investment over 90 days.

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

Datamatics Global Services  vs.  SAL Steel Limited

Datamatics Global

Risk-Adjusted Performance

7 of 100

Insignificant

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 inconsistent forward indicators, Datamatics Global unveiled solid returns over the last few months and may actually be approaching a breakup point.

SAL Steel Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SAL Steel Limited 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 technical and 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 SAL Steel

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

The idea behind Datamatics Global Services and SAL Steel 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 Transaction History module to view history of all your transactions and understand their impact on performance.