Correlation Between Datamatics Global and Zomato

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

Diversification Opportunities for Datamatics Global and Zomato

0.57

Correlation Coefficient

Datamatics Global  Zomato

Very weak diversification

The 3 months correlation between Datamatics and Zomato is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Datamatics Global Services and Zomato Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zomato 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 Zomato. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zomato Limited has no effect on the direction of Datamatics Global i.e., Datamatics Global and Zomato go up and down completely randomly.

Pair Corralation between Datamatics Global and Zomato

Assuming the 90 days trading horizon Datamatics Global is expected to generate 1.74 times less return on investment than Zomato. In addition to that, Datamatics Global is 1.41 times more volatile than Zomato Limited. It trades about 0.07 of its total potential returns per unit of risk. Zomato Limited is currently generating about 0.18 per unit of volatility. If you would invest  5,075  in Zomato Limited on October 5, 2024 and sell it today you would earn a total of  23,385  from holding Zomato Limited or generate 460.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.55%
Values	Daily Returns

Datamatics Global Services  vs.  Zomato Limited

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

Zomato Limited

Risk-Adjusted Performance

4 of 100

Weak

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

Pair Trading with Datamatics Global and Zomato

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

The idea behind Datamatics Global Services and Zomato 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.