Correlation Between DATA Communications and Ijj

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

By analyzing existing cross correlation between DATA Communications Management and Ijj Corporation, you can compare the effects of market volatilities on DATA Communications and Ijj 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 DATA Communications with a short position of Ijj. Check out your portfolio center. Please also check ongoing floating volatility patterns of DATA Communications and Ijj.

Diversification Opportunities for DATA Communications and Ijj

0.1

Correlation Coefficient

DATA Communications  Ijj

Average diversification

The 3 months correlation between DATA and Ijj is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding DATA Communications Management and Ijj Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ijj Corporation and DATA Communications 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 DATA Communications Management are associated (or correlated) with Ijj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ijj Corporation has no effect on the direction of DATA Communications i.e., DATA Communications and Ijj go up and down completely randomly.

Pair Corralation between DATA Communications and Ijj

Assuming the 90 days horizon DATA Communications is expected to generate 12.29 times less return on investment than Ijj. But when comparing it to its historical volatility, DATA Communications Management is 8.02 times less risky than Ijj. It trades about 0.14 of its potential returns per unit of risk. Ijj Corporation is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  0.03  in Ijj Corporation on October 10, 2024 and sell it today you would earn a total of  0.02  from holding Ijj Corporation or generate 66.67% return on investment over 90 days.

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

DATA Communications Management  vs.  Ijj Corp.

DATA Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DATA Communications Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Ijj Corporation

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ijj Corporation are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain forward-looking indicators, Ijj reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DATA Communications and Ijj

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

The idea behind DATA Communications Management and Ijj Corporation 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.