Correlation Between DATATEC and FedEx

Can any of the company-specific risk be diversified away by investing in both DATATEC and FedEx 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 FedEx 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 FedEx, you can compare the effects of market volatilities on DATATEC and FedEx 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 FedEx. Check out your portfolio center. Please also check ongoing floating volatility patterns of DATATEC and FedEx.

Diversification Opportunities for DATATEC and FedEx

0.53

Correlation Coefficient

DATATEC  FedEx

Very weak diversification

The 3 months correlation between DATATEC and FedEx is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding DATATEC LTD 2 and FedEx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FedEx 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 FedEx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FedEx has no effect on the direction of DATATEC i.e., DATATEC and FedEx go up and down completely randomly.

Pair Corralation between DATATEC and FedEx

Assuming the 90 days trading horizon DATATEC LTD 2 is expected to generate 1.06 times more return on investment than FedEx. However, DATATEC is 1.06 times more volatile than FedEx. It trades about 0.22 of its potential returns per unit of risk. FedEx is currently generating about 0.05 per unit of risk. If you would invest  359.00  in DATATEC LTD 2 on October 24, 2024 and sell it today you would earn a total of  129.00  from holding DATATEC LTD 2 or generate 35.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.22%
Values	Daily Returns

DATATEC LTD 2  vs.  FedEx

DATATEC LTD 2

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in DATATEC LTD 2 are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DATATEC reported solid returns over the last few months and may actually be approaching a breakup point.

FedEx

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FedEx are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, FedEx may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with DATATEC and FedEx

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

The idea behind DATATEC LTD 2 and FedEx 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.