Correlation Between Datamatics Global and Steelcast

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

By analyzing existing cross correlation between Datamatics Global Services and Steelcast Limited, you can compare the effects of market volatilities on Datamatics Global and Steelcast 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 Datamatics Global with a short position of Steelcast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datamatics Global and Steelcast.

Diversification Opportunities for Datamatics Global and Steelcast

-0.33

Correlation Coefficient

Datamatics Global  Steelcast

Very good diversification

The 3 months correlation between Datamatics and Steelcast is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Datamatics Global Services and Steelcast Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steelcast Limited and Datamatics Global 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 Datamatics Global Services are associated (or correlated) with Steelcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steelcast Limited has no effect on the direction of Datamatics Global i.e., Datamatics Global and Steelcast go up and down completely randomly.

Pair Corralation between Datamatics Global and Steelcast

Assuming the 90 days trading horizon Datamatics Global Services is expected to under-perform the Steelcast. But the stock apears to be less risky and, when comparing its historical volatility, Datamatics Global Services is 1.2 times less risky than Steelcast. The stock trades about -0.08 of its potential returns per unit of risk. The Steelcast Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  77,620  in Steelcast Limited on September 5, 2024 and sell it today you would earn a total of  4,440  from holding Steelcast Limited or generate 5.72% return on investment over 90 days.

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

Datamatics Global Services  vs.  Steelcast Limited

Datamatics Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Datamatics Global Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's forward indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Steelcast Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Steelcast Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Steelcast may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Datamatics Global and Steelcast

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

The idea behind Datamatics Global Services and Steelcast Limited 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.