Correlation Between Datawalk and Globe Trade

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

By analyzing existing cross correlation between Datawalk SA and Globe Trade Centre, you can compare the effects of market volatilities on Datawalk and Globe Trade 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 Datawalk with a short position of Globe Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datawalk and Globe Trade.

Diversification Opportunities for Datawalk and Globe Trade

-0.53

Correlation Coefficient

Datawalk  Globe Trade

Excellent diversification

The 3 months correlation between Datawalk and Globe is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Datawalk SA and Globe Trade Centre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Trade Centre and Datawalk 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 Datawalk SA are associated (or correlated) with Globe Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Trade Centre has no effect on the direction of Datawalk i.e., Datawalk and Globe Trade go up and down completely randomly.

Pair Corralation between Datawalk and Globe Trade

Assuming the 90 days trading horizon Datawalk SA is expected to generate 2.01 times more return on investment than Globe Trade. However, Datawalk is 2.01 times more volatile than Globe Trade Centre. It trades about 0.06 of its potential returns per unit of risk. Globe Trade Centre is currently generating about -0.02 per unit of risk. If you would invest  4,305  in Datawalk SA on September 16, 2024 and sell it today you would earn a total of  485.00  from holding Datawalk SA or generate 11.27% return on investment over 90 days.

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

Datawalk SA  vs.  Globe Trade Centre

Datawalk SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Datawalk SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Datawalk reported solid returns over the last few months and may actually be approaching a breakup point.

Globe Trade Centre

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Globe Trade Centre has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Globe Trade is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Datawalk and Globe Trade

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

The idea behind Datawalk SA and Globe Trade Centre 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.