Correlation Between MGP Ingredients and DATAGROUP

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

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

Diversification Opportunities for MGP Ingredients and DATAGROUP

-0.34

Correlation Coefficient

MGP Ingredients  DATAGROUP

Very good diversification

The 3 months correlation between MGP and DATAGROUP is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding MGP Ingredients and DATAGROUP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATAGROUP SE and MGP Ingredients 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 MGP Ingredients 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 MGP Ingredients i.e., MGP Ingredients and DATAGROUP go up and down completely randomly.

Pair Corralation between MGP Ingredients and DATAGROUP

Assuming the 90 days trading horizon MGP Ingredients is expected to under-perform the DATAGROUP. In addition to that, MGP Ingredients is 1.19 times more volatile than DATAGROUP SE. It trades about -0.29 of its total potential returns per unit of risk. DATAGROUP SE is currently generating about 0.03 per unit of volatility. If you would invest  4,650  in DATAGROUP SE on October 4, 2024 and sell it today you would earn a total of  30.00  from holding DATAGROUP SE or generate 0.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

MGP Ingredients  vs.  DATAGROUP SE

MGP Ingredients

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MGP Ingredients 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 basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

DATAGROUP SE

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DATAGROUP SE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical indicators, DATAGROUP may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with MGP Ingredients and DATAGROUP

The main advantage of trading using opposite MGP Ingredients and DATAGROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGP Ingredients 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 MGP Ingredients 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.