Correlation Between Retail Estates and DATAGROUP

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

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

Diversification Opportunities for Retail Estates and DATAGROUP

-0.51

Correlation Coefficient

Retail Estates  DATAGROUP

Excellent diversification

The 3 months correlation between Retail and DATAGROUP is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates NV and DATAGROUP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATAGROUP SE and Retail Estates 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 Retail Estates NV 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 Retail Estates i.e., Retail Estates and DATAGROUP go up and down completely randomly.

Pair Corralation between Retail Estates and DATAGROUP

Assuming the 90 days horizon Retail Estates NV is expected to generate 0.62 times more return on investment than DATAGROUP. However, Retail Estates NV is 1.62 times less risky than DATAGROUP. It trades about -0.07 of its potential returns per unit of risk. DATAGROUP SE is currently generating about -0.21 per unit of risk. If you would invest  5,780  in Retail Estates NV on October 22, 2024 and sell it today you would lose (80.00) from holding Retail Estates NV or give up 1.38% of portfolio value over 90 days.

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

Retail Estates NV  vs.  DATAGROUP SE

Retail Estates NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Retail Estates NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

DATAGROUP SE

Risk-Adjusted Performance

3 of 100

Very Weak

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 stable technical 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 Retail Estates and DATAGROUP

The main advantage of trading using opposite Retail Estates and DATAGROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Estates 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 Retail Estates NV 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.