Correlation Between DATATEC and Data Modul

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

By analyzing existing cross correlation between DATATEC LTD 2 and Data Modul AG, you can compare the effects of market volatilities on DATATEC and Data Modul 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 DATATEC with a short position of Data Modul. Check out your portfolio center. Please also check ongoing floating volatility patterns of DATATEC and Data Modul.

Diversification Opportunities for DATATEC and Data Modul

0.18

Correlation Coefficient

DATATEC  Data Modul

Average diversification

The 3 months correlation between DATATEC and Data is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding DATATEC LTD 2 and Data Modul AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data Modul AG and DATATEC 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 DATATEC LTD 2 are associated (or correlated) with Data Modul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data Modul AG has no effect on the direction of DATATEC i.e., DATATEC and Data Modul go up and down completely randomly.

Pair Corralation between DATATEC and Data Modul

Assuming the 90 days trading horizon DATATEC LTD 2 is expected to generate 1.11 times more return on investment than Data Modul. However, DATATEC is 1.11 times more volatile than Data Modul AG. It trades about 0.22 of its potential returns per unit of risk. Data Modul AG is currently generating about -0.02 per unit of risk. If you would invest  444.00  in DATATEC LTD 2 on October 10, 2024 and sell it today you would earn a total of  48.00  from holding DATATEC LTD 2 or generate 10.81% return on investment over 90 days.

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

DATATEC LTD 2  vs.  Data Modul AG

DATATEC LTD 2

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in DATATEC LTD 2 are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, DATATEC reported solid returns over the last few months and may actually be approaching a breakup point.

Data Modul AG

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Data Modul AG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain primary indicators, Data Modul may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with DATATEC and Data Modul

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

The idea behind DATATEC LTD 2 and Data Modul AG 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.