Correlation Between PPHE Hotel and Datagroup

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

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

Diversification Opportunities for PPHE Hotel and Datagroup

0.1

Correlation Coefficient

PPHE Hotel  Datagroup

Average diversification

The 3 months correlation between PPHE and Datagroup is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding PPHE Hotel Group and Datagroup SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datagroup SE and PPHE Hotel 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 PPHE Hotel Group 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 PPHE Hotel i.e., PPHE Hotel and Datagroup go up and down completely randomly.

Pair Corralation between PPHE Hotel and Datagroup

Assuming the 90 days trading horizon PPHE Hotel Group is expected to under-perform the Datagroup. But the stock apears to be less risky and, when comparing its historical volatility, PPHE Hotel Group is 1.43 times less risky than Datagroup. The stock trades about -0.02 of its potential returns per unit of risk. The Datagroup SE is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  4,950  in Datagroup SE on September 13, 2024 and sell it today you would lose (350.00) from holding Datagroup SE or give up 7.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.68%
Values	Daily Returns

PPHE Hotel Group  vs.  Datagroup SE

PPHE Hotel Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PPHE Hotel Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, PPHE Hotel is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Datagroup SE

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Datagroup SE are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Datagroup unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PPHE Hotel and Datagroup

The main advantage of trading using opposite PPHE Hotel and Datagroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPHE Hotel 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 PPHE Hotel Group 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.