Correlation Between Kerry and Datalex

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

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

Diversification Opportunities for Kerry and Datalex

0.18

Correlation Coefficient

Kerry  Datalex

Average diversification

The 3 months correlation between Kerry and Datalex is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Kerry Group and Datalex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datalex and Kerry 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 Kerry Group are associated (or correlated) with Datalex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datalex has no effect on the direction of Kerry i.e., Kerry and Datalex go up and down completely randomly.

Pair Corralation between Kerry and Datalex

Assuming the 90 days trading horizon Kerry Group is expected to generate 0.43 times more return on investment than Datalex. However, Kerry Group is 2.34 times less risky than Datalex. It trades about -0.01 of its potential returns per unit of risk. Datalex is currently generating about -0.04 per unit of risk. If you would invest  9,295  in Kerry Group on September 16, 2024 and sell it today you would lose (155.00) from holding Kerry Group or give up 1.67% of portfolio value over 90 days.

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

Kerry Group  vs.  Datalex

Kerry Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kerry Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Kerry is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Datalex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Datalex has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Kerry and Datalex

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

The idea behind Kerry Group and Datalex 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.