Correlation Between Datagroup and Applied Materials
Can any of the company-specific risk be diversified away by investing in both Datagroup and Applied Materials 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 Datagroup and Applied Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Datagroup SE and Applied Materials, you can compare the effects of market volatilities on Datagroup and Applied Materials 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 Datagroup with a short position of Applied Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datagroup and Applied Materials.
Diversification Opportunities for Datagroup and Applied Materials
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Datagroup and Applied is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Datagroup SE and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials and Datagroup 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 Datagroup SE are associated (or correlated) with Applied Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials has no effect on the direction of Datagroup i.e., Datagroup and Applied Materials go up and down completely randomly.
Pair Corralation between Datagroup and Applied Materials
Assuming the 90 days trading horizon Datagroup is expected to generate 24.78 times less return on investment than Applied Materials. But when comparing it to its historical volatility, Datagroup SE is 1.21 times less risky than Applied Materials. It trades about 0.0 of its potential returns per unit of risk. Applied Materials is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 14,946 in Applied Materials on September 14, 2024 and sell it today you would earn a total of 1,919 from holding Applied Materials or generate 12.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.45% |
| Values | Daily Returns |
Datagroup SE vs. Applied Materials
Performance |
| Timeline |
| Datagroup SE |
| Applied Materials |
Datagroup and Applied Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Datagroup and Applied Materials
The main advantage of trading using opposite Datagroup and Applied Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Datagroup position performs unexpectedly, Applied Materials 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 Applied Materials will offset losses from the drop in Applied Materials' long position.| Datagroup vs. Monster Beverage Corp | Datagroup vs. Allianz Technology Trust | Datagroup vs. Flow Traders NV | Datagroup vs. Albion Technology General |
| Applied Materials vs. Verizon Communications | Applied Materials vs. Datagroup SE | Applied Materials vs. bet at home AG | Applied Materials vs. Public Storage |
Check out your portfolio center.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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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