Correlation Between Trematon Capital and Datatec

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

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

Diversification Opportunities for Trematon Capital and Datatec

-0.4

Correlation Coefficient

Trematon Capital  Datatec

Very good diversification

The 3 months correlation between Trematon and Datatec is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Trematon Capital Investments and Datatec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datatec and Trematon Capital 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 Trematon Capital Investments are associated (or correlated) with Datatec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datatec has no effect on the direction of Trematon Capital i.e., Trematon Capital and Datatec go up and down completely randomly.

Pair Corralation between Trematon Capital and Datatec

Assuming the 90 days trading horizon Trematon Capital Investments is expected to under-perform the Datatec. In addition to that, Trematon Capital is 2.86 times more volatile than Datatec. It trades about 0.0 of its total potential returns per unit of risk. Datatec is currently generating about 0.08 per unit of volatility. If you would invest  439,768  in Datatec on December 2, 2024 and sell it today you would earn a total of  37,032  from holding Datatec or generate 8.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Trematon Capital Investments  vs.  Datatec

Trematon Capital Inv

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trematon Capital Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Trematon Capital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Datatec

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Datatec are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Datatec may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Trematon Capital and Datatec

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

The idea behind Trematon Capital Investments and Datatec 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .