Correlation Between Dexterra and DATA Communications

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

By analyzing existing cross correlation between Dexterra Group and DATA Communications Management, you can compare the effects of market volatilities on Dexterra and DATA Communications 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 Dexterra with a short position of DATA Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dexterra and DATA Communications.

Diversification Opportunities for Dexterra and DATA Communications

-0.09

Correlation Coefficient

Dexterra  DATA Communications

Good diversification

The 3 months correlation between Dexterra and DATA is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Dexterra Group and DATA Communications Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATA Communications and Dexterra 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 Dexterra Group are associated (or correlated) with DATA Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATA Communications has no effect on the direction of Dexterra i.e., Dexterra and DATA Communications go up and down completely randomly.

Pair Corralation between Dexterra and DATA Communications

Assuming the 90 days horizon Dexterra Group is expected to generate 0.31 times more return on investment than DATA Communications. However, Dexterra Group is 3.22 times less risky than DATA Communications. It trades about 0.1 of its potential returns per unit of risk. DATA Communications Management is currently generating about -0.11 per unit of risk. If you would invest  468.00  in Dexterra Group on September 4, 2024 and sell it today you would earn a total of  44.00  from holding Dexterra Group or generate 9.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Dexterra Group  vs.  DATA Communications Management

Dexterra Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dexterra Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Dexterra may actually be approaching a critical reversion point that can send shares even higher in January 2025.

DATA Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DATA Communications Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Dexterra and DATA Communications

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

The idea behind Dexterra Group and DATA Communications Management 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.