Correlation Between Datadog and Gitlab

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

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

Diversification Opportunities for Datadog and Gitlab

-0.01

Correlation Coefficient

Datadog  Gitlab

Good diversification

The 3 months correlation between Datadog and Gitlab is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Datadog and Gitlab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gitlab Inc and Datadog 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 Datadog are associated (or correlated) with Gitlab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gitlab Inc has no effect on the direction of Datadog i.e., Datadog and Gitlab go up and down completely randomly.

Pair Corralation between Datadog and Gitlab

Given the investment horizon of 90 days Datadog is expected to under-perform the Gitlab. But the stock apears to be less risky and, when comparing its historical volatility, Datadog is 1.36 times less risky than Gitlab. The stock trades about -0.18 of its potential returns per unit of risk. The Gitlab Inc is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  6,375  in Gitlab Inc on November 28, 2024 and sell it today you would lose (295.00) from holding Gitlab Inc or give up 4.63% of portfolio value over 90 days.

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

Datadog  vs.  Gitlab Inc

Datadog

Risk-Adjusted Performance

Very Weak

Over the last 90 days Datadog has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Gitlab Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gitlab Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Gitlab is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Datadog and Gitlab

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

The idea behind Datadog and Gitlab Inc 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.