Correlation Between Datalogic SpA and Traton SE

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

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

Diversification Opportunities for Datalogic SpA and Traton SE

0.02

Correlation Coefficient

Datalogic SpA  Traton SE

Significant diversification

The 3 months correlation between Datalogic and Traton is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Datalogic SpA and Traton SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Traton SE and Datalogic SpA 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 Datalogic SpA are associated (or correlated) with Traton SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Traton SE has no effect on the direction of Datalogic SpA i.e., Datalogic SpA and Traton SE go up and down completely randomly.

Pair Corralation between Datalogic SpA and Traton SE

Assuming the 90 days trading horizon Datalogic SpA is expected to generate 3.04 times less return on investment than Traton SE. In addition to that, Datalogic SpA is 1.28 times more volatile than Traton SE. It trades about 0.01 of its total potential returns per unit of risk. Traton SE is currently generating about 0.02 per unit of volatility. If you would invest  3,000  in Traton SE on September 15, 2024 and sell it today you would earn a total of  105.00  from holding Traton SE or generate 3.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.24%
Values	Daily Returns

Datalogic SpA  vs.  Traton SE

Datalogic SpA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Datalogic SpA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Traton SE

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Traton SE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Traton SE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Datalogic SpA and Traton SE

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

The idea behind Datalogic SpA and Traton SE 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.