Correlation Between Monks Investment and Datagroup

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

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

Diversification Opportunities for Monks Investment and Datagroup

0.01

Correlation Coefficient

Monks Investment  Datagroup

Significant diversification

The 3 months correlation between Monks and Datagroup is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and Datagroup SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datagroup SE and Monks Investment 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 Monks Investment Trust 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 Monks Investment i.e., Monks Investment and Datagroup go up and down completely randomly.

Pair Corralation between Monks Investment and Datagroup

Assuming the 90 days trading horizon Monks Investment Trust is expected to generate 0.53 times more return on investment than Datagroup. However, Monks Investment Trust is 1.89 times less risky than Datagroup. It trades about -0.06 of its potential returns per unit of risk. Datagroup SE is currently generating about -0.03 per unit of risk. If you would invest  126,800  in Monks Investment Trust on December 24, 2024 and sell it today you would lose (6,800) from holding Monks Investment Trust or give up 5.36% of portfolio value over 90 days.

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

Monks Investment Trust  vs.  Datagroup SE

Monks Investment Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Monks Investment Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Monks Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Datagroup SE

Risk-Adjusted Performance

Very Weak

Over the last 90 days Datagroup SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Datagroup is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Monks Investment and Datagroup

The main advantage of trading using opposite Monks Investment and Datagroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monks Investment 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 Monks Investment Trust 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.

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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.