Correlation Between Dataprep Holdings and Datasonic Group

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

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

Diversification Opportunities for Dataprep Holdings and Datasonic Group

0.6

Correlation Coefficient

Dataprep Holdings  Datasonic Group

Poor diversification

The 3 months correlation between Dataprep and Datasonic is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Dataprep Holdings Bhd and Datasonic Group Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datasonic Group Bhd and Dataprep 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 Dataprep Holdings Bhd are associated (or correlated) with Datasonic Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datasonic Group Bhd has no effect on the direction of Dataprep Holdings i.e., Dataprep Holdings and Datasonic Group go up and down completely randomly.

Pair Corralation between Dataprep Holdings and Datasonic Group

Assuming the 90 days trading horizon Dataprep Holdings Bhd is expected to generate 2.21 times more return on investment than Datasonic Group. However, Dataprep Holdings is 2.21 times more volatile than Datasonic Group Bhd. It trades about 0.0 of its potential returns per unit of risk. Datasonic Group Bhd is currently generating about -0.03 per unit of risk. If you would invest  17.00  in Dataprep Holdings Bhd on September 14, 2024 and sell it today you would lose (1.00) from holding Dataprep Holdings Bhd or give up 5.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Dataprep Holdings Bhd  vs.  Datasonic Group Bhd

Dataprep Holdings Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dataprep Holdings Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Dataprep Holdings is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Datasonic Group Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Datasonic Group Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Datasonic Group is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Dataprep Holdings and Datasonic Group

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

The idea behind Dataprep Holdings Bhd and Datasonic Group Bhd 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.