Correlation Between HEALTHCARE REAL and DATAGROUP

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

By analyzing existing cross correlation between HEALTHCARE REAL A and DATAGROUP SE, you can compare the effects of market volatilities on HEALTHCARE REAL and DATAGROUP 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 HEALTHCARE REAL with a short position of DATAGROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEALTHCARE REAL and DATAGROUP.

Diversification Opportunities for HEALTHCARE REAL and DATAGROUP

0.4

Correlation Coefficient

HEALTHCARE REAL  DATAGROUP

Very weak diversification

The 3 months correlation between HEALTHCARE and DATAGROUP is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding HEALTHCARE REAL A and DATAGROUP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATAGROUP SE and HEALTHCARE REAL 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 HEALTHCARE REAL A are associated (or correlated) with DATAGROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATAGROUP SE has no effect on the direction of HEALTHCARE REAL i.e., HEALTHCARE REAL and DATAGROUP go up and down completely randomly.

Pair Corralation between HEALTHCARE REAL and DATAGROUP

Assuming the 90 days horizon HEALTHCARE REAL A is expected to under-perform the DATAGROUP. But the stock apears to be less risky and, when comparing its historical volatility, HEALTHCARE REAL A is 1.36 times less risky than DATAGROUP. The stock trades about -0.23 of its potential returns per unit of risk. The DATAGROUP SE is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4,520  in DATAGROUP SE on September 28, 2024 and sell it today you would earn a total of  105.00  from holding DATAGROUP SE or generate 2.32% return on investment over 90 days.

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

HEALTHCARE REAL A  vs.  DATAGROUP SE

HEALTHCARE REAL A

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HEALTHCARE REAL A are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, HEALTHCARE REAL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

DATAGROUP SE

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DATAGROUP SE are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical indicators, DATAGROUP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with HEALTHCARE REAL and DATAGROUP

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

The idea behind HEALTHCARE REAL A and DATAGROUP SE 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.