Correlation Between Datalex and FD Technologies

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

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

Diversification Opportunities for Datalex and FD Technologies

0.26

Correlation Coefficient

Datalex  FD Technologies

Modest diversification

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

Pair Corralation between Datalex and FD Technologies

Assuming the 90 days trading horizon Datalex is expected to generate 2.08 times more return on investment than FD Technologies. However, Datalex is 2.08 times more volatile than FD Technologies PLC. It trades about 0.06 of its potential returns per unit of risk. FD Technologies PLC is currently generating about 0.11 per unit of risk. If you would invest  33.00  in Datalex on October 25, 2024 and sell it today you would earn a total of  3.00  from holding Datalex or generate 9.09% return on investment over 90 days.

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

Datalex  vs.  FD Technologies PLC

Datalex

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Datalex are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Datalex may actually be approaching a critical reversion point that can send shares even higher in February 2025.

FD Technologies PLC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FD Technologies PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, FD Technologies may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Datalex and FD Technologies

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

The idea behind Datalex and FD Technologies PLC 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.