Correlation Between DATATEC and SERI INDUSTRIAL

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

Diversification Opportunities for DATATEC and SERI INDUSTRIAL

-0.73

Correlation Coefficient

DATATEC  SERI INDUSTRIAL

Pay attention - limited upside

The 3 months correlation between DATATEC and SERI is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding DATATEC LTD 2 and SERI INDUSTRIAL EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SERI INDUSTRIAL EO 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 SERI INDUSTRIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SERI INDUSTRIAL EO has no effect on the direction of DATATEC i.e., DATATEC and SERI INDUSTRIAL go up and down completely randomly.

Pair Corralation between DATATEC and SERI INDUSTRIAL

Assuming the 90 days trading horizon DATATEC LTD 2 is expected to generate 0.56 times more return on investment than SERI INDUSTRIAL. However, DATATEC LTD 2 is 1.78 times less risky than SERI INDUSTRIAL. It trades about 0.2 of its potential returns per unit of risk. SERI INDUSTRIAL EO is currently generating about -0.01 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  115.00  from holding DATATEC LTD 2 or generate 32.03% return on investment over 90 days.

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

DATATEC LTD 2  vs.  SERI INDUSTRIAL EO

DATATEC LTD 2

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DATATEC LTD 2 are ranked lower than 15 (%) 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.

SERI INDUSTRIAL EO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SERI INDUSTRIAL EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, SERI INDUSTRIAL is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with DATATEC and SERI INDUSTRIAL

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

The idea behind DATATEC LTD 2 and SERI INDUSTRIAL EO 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.