Correlation Between Indian Oil and Datamatics Global

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

By analyzing existing cross correlation between Indian Oil and Datamatics Global Services, you can compare the effects of market volatilities on Indian Oil and Datamatics Global 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 Indian Oil with a short position of Datamatics Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indian Oil and Datamatics Global.

Diversification Opportunities for Indian Oil and Datamatics Global

0.73

Correlation Coefficient

Indian Oil  Datamatics Global

Poor diversification

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

Pair Corralation between Indian Oil and Datamatics Global

Assuming the 90 days trading horizon Indian Oil is expected to generate 1.22 times less return on investment than Datamatics Global. But when comparing it to its historical volatility, Indian Oil is 1.47 times less risky than Datamatics Global. It trades about 0.08 of its potential returns per unit of risk. Datamatics Global Services is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  27,878  in Datamatics Global Services on September 12, 2024 and sell it today you would earn a total of  35,952  from holding Datamatics Global Services or generate 128.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Indian Oil  vs.  Datamatics Global Services

Indian Oil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indian Oil has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Datamatics Global

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Datamatics Global Services are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, Datamatics Global is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Indian Oil and Datamatics Global

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

The idea behind Indian Oil and Datamatics Global Services 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.