Correlation Between Information Services and Data Modul

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

By analyzing existing cross correlation between Information Services International Dentsu and Data Modul AG, you can compare the effects of market volatilities on Information Services and Data Modul 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 Information Services with a short position of Data Modul. Check out your portfolio center. Please also check ongoing floating volatility patterns of Information Services and Data Modul.

Diversification Opportunities for Information Services and Data Modul

-0.47

Correlation Coefficient

Information Services  Data Modul

Very good diversification

The 3 months correlation between Information and Data is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Information Services Internati and Data Modul AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data Modul AG and Information Services 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 Information Services International Dentsu are associated (or correlated) with Data Modul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data Modul AG has no effect on the direction of Information Services i.e., Information Services and Data Modul go up and down completely randomly.

Pair Corralation between Information Services and Data Modul

Assuming the 90 days horizon Information Services International Dentsu is expected to under-perform the Data Modul. But the stock apears to be less risky and, when comparing its historical volatility, Information Services International Dentsu is 1.49 times less risky than Data Modul. The stock trades about -0.15 of its potential returns per unit of risk. The Data Modul AG is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  2,600  in Data Modul AG on October 25, 2024 and sell it today you would lose (60.00) from holding Data Modul AG or give up 2.31% of portfolio value over 90 days.

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

Information Services Internati  vs.  Data Modul AG

Information Services

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Information Services International Dentsu are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Information Services may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Data Modul AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Data Modul AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Information Services and Data Modul

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

The idea behind Information Services International Dentsu and Data Modul AG 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 Stocks Directory module to find actively traded stocks across global markets.