Correlation Between Datagroup and Innovative Industrial

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

By analyzing existing cross correlation between Datagroup SE and Innovative Industrial Properties, you can compare the effects of market volatilities on Datagroup and Innovative Industrial 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 Innovative Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datagroup and Innovative Industrial.

Diversification Opportunities for Datagroup and Innovative Industrial

-0.43

Correlation Coefficient

Datagroup  Innovative Industrial

Very good diversification

The 3 months correlation between Datagroup and Innovative is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Datagroup SE and Innovative Industrial Properti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Industrial 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 Innovative Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Industrial has no effect on the direction of Datagroup i.e., Datagroup and Innovative Industrial go up and down completely randomly.

Pair Corralation between Datagroup and Innovative Industrial

Assuming the 90 days trading horizon Datagroup SE is expected to generate 0.66 times more return on investment than Innovative Industrial. However, Datagroup SE is 1.52 times less risky than Innovative Industrial. It trades about 0.09 of its potential returns per unit of risk. Innovative Industrial Properties is currently generating about -0.24 per unit of risk. If you would invest  4,080  in Datagroup SE on September 25, 2024 and sell it today you would earn a total of  545.00  from holding Datagroup SE or generate 13.36% return on investment over 90 days.

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

Datagroup SE  vs.  Innovative Industrial Properti

Datagroup SE

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Datagroup SE are ranked lower than 7 (%) 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.

Innovative Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innovative Industrial Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Datagroup and Innovative Industrial

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

The idea behind Datagroup SE and Innovative Industrial Properties 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.