Correlation Between DATAGROUP and TFS FINANCIAL

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

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

Diversification Opportunities for DATAGROUP and TFS FINANCIAL

0.27

Correlation Coefficient

DATAGROUP  TFS FINANCIAL

Modest diversification

The 3 months correlation between DATAGROUP and TFS is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding DATAGROUP SE and TFS FINANCIAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFS FINANCIAL 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 TFS FINANCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TFS FINANCIAL has no effect on the direction of DATAGROUP i.e., DATAGROUP and TFS FINANCIAL go up and down completely randomly.

Pair Corralation between DATAGROUP and TFS FINANCIAL

Assuming the 90 days trading horizon DATAGROUP SE is expected to generate 1.31 times more return on investment than TFS FINANCIAL. However, DATAGROUP is 1.31 times more volatile than TFS FINANCIAL. It trades about 0.11 of its potential returns per unit of risk. TFS FINANCIAL is currently generating about 0.07 per unit of risk. If you would invest  3,915  in DATAGROUP SE on September 22, 2024 and sell it today you would earn a total of  685.00  from holding DATAGROUP SE or generate 17.5% return on investment over 90 days.

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

DATAGROUP SE  vs.  TFS FINANCIAL

DATAGROUP SE

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DATAGROUP SE are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical indicators, DATAGROUP unveiled solid returns over the last few months and may actually be approaching a breakup point.

TFS FINANCIAL

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TFS FINANCIAL are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, TFS FINANCIAL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with DATAGROUP and TFS FINANCIAL

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

The idea behind DATAGROUP SE and TFS FINANCIAL 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.