Correlation Between Datalex and Donegal Investment

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

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

Diversification Opportunities for Datalex and Donegal Investment

0.16

Correlation Coefficient

Datalex  Donegal Investment

Average diversification

The 3 months correlation between Datalex and Donegal is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Datalex and Donegal Investment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Donegal Investment and Datalex 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 Datalex are associated (or correlated) with Donegal Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Donegal Investment has no effect on the direction of Datalex i.e., Datalex and Donegal Investment go up and down completely randomly.

Pair Corralation between Datalex and Donegal Investment

Assuming the 90 days trading horizon Datalex is expected to under-perform the Donegal Investment. In addition to that, Datalex is 13.96 times more volatile than Donegal Investment Group. It trades about -0.11 of its total potential returns per unit of risk. Donegal Investment Group is currently generating about 0.04 per unit of volatility. If you would invest  1,650  in Donegal Investment Group on September 18, 2024 and sell it today you would earn a total of  10.00  from holding Donegal Investment Group or generate 0.61% return on investment over 90 days.

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

Datalex  vs.  Donegal Investment Group

Datalex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Datalex has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Donegal Investment

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Donegal Investment Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Donegal Investment 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 Datalex and Donegal Investment

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

The idea behind Datalex and Donegal Investment Group 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..