Correlation Between Swvl Holdings and Datadog

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

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

Diversification Opportunities for Swvl Holdings and Datadog

0.22

Correlation Coefficient

Swvl Holdings  Datadog

Modest diversification

The 3 months correlation between Swvl and Datadog is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Swvl Holdings Corp and Datadog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datadog and Swvl Holdings 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 Swvl Holdings Corp are associated (or correlated) with Datadog. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datadog has no effect on the direction of Swvl Holdings i.e., Swvl Holdings and Datadog go up and down completely randomly.

Pair Corralation between Swvl Holdings and Datadog

Assuming the 90 days horizon Swvl Holdings is expected to generate 2.53 times less return on investment than Datadog. In addition to that, Swvl Holdings is 3.41 times more volatile than Datadog. It trades about 0.02 of its total potential returns per unit of risk. Datadog is currently generating about 0.21 per unit of volatility. If you would invest  11,140  in Datadog on September 16, 2024 and sell it today you would earn a total of  4,163  from holding Datadog or generate 37.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.77%
Values	Daily Returns

Swvl Holdings Corp  vs.  Datadog

Swvl Holdings Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Swvl Holdings Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal essential indicators, Swvl Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Datadog

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Datadog are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Datadog reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Swvl Holdings and Datadog

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

The idea behind Swvl Holdings Corp and Datadog 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.