Correlation Between DOCDATA and DATANG INTL

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

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

Diversification Opportunities for DOCDATA and DATANG INTL

0.19

Correlation Coefficient

DOCDATA  DATANG INTL

Average diversification

The 3 months correlation between DOCDATA and DATANG is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding DOCDATA and DATANG INTL POW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATANG INTL POW and DOCDATA 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 DOCDATA are associated (or correlated) with DATANG INTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATANG INTL POW has no effect on the direction of DOCDATA i.e., DOCDATA and DATANG INTL go up and down completely randomly.

Pair Corralation between DOCDATA and DATANG INTL

Assuming the 90 days trading horizon DOCDATA is expected to under-perform the DATANG INTL. But the stock apears to be less risky and, when comparing its historical volatility, DOCDATA is 1.4 times less risky than DATANG INTL. The stock trades about -0.18 of its potential returns per unit of risk. The DATANG INTL POW is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  16.00  in DATANG INTL POW on September 24, 2024 and sell it today you would earn a total of  2.00  from holding DATANG INTL POW or generate 12.5% return on investment over 90 days.

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

DOCDATA  vs.  DATANG INTL POW

DOCDATA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DOCDATA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

DATANG INTL POW

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DATANG INTL POW are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, DATANG INTL unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DOCDATA and DATANG INTL

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

The idea behind DOCDATA and DATANG INTL POW 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.