Correlation Between FC Investment and Datagroup

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

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

Diversification Opportunities for FC Investment and Datagroup

0.55

Correlation Coefficient

FC Investment  Datagroup

Very weak diversification

The 3 months correlation between FCIT and Datagroup is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding FC Investment Trust and Datagroup SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datagroup SE and FC Investment 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 FC Investment Trust are associated (or correlated) with Datagroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datagroup SE has no effect on the direction of FC Investment i.e., FC Investment and Datagroup go up and down completely randomly.

Pair Corralation between FC Investment and Datagroup

Assuming the 90 days trading horizon FC Investment is expected to generate 1.72 times less return on investment than Datagroup. But when comparing it to its historical volatility, FC Investment Trust is 3.65 times less risky than Datagroup. It trades about 0.19 of its potential returns per unit of risk. Datagroup SE is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  4,080  in Datagroup SE on September 25, 2024 and sell it today you would earn a total of  545.00  from holding Datagroup SE or generate 13.36% return on investment over 90 days.

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

FC Investment Trust  vs.  Datagroup SE

FC Investment Trust

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FC Investment Trust are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, FC Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Datagroup SE

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Datagroup SE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Datagroup unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FC Investment and Datagroup

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

The idea behind FC Investment Trust and Datagroup 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.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.