Correlation Between FD Technologies and Datalex

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

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

Diversification Opportunities for FD Technologies and Datalex

-0.35

Correlation Coefficient

FD Technologies  Datalex

Very good diversification

The 3 months correlation between GYQ and Datalex is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding FD Technologies PLC and Datalex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datalex and FD Technologies 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 FD Technologies PLC are associated (or correlated) with Datalex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datalex has no effect on the direction of FD Technologies i.e., FD Technologies and Datalex go up and down completely randomly.

Pair Corralation between FD Technologies and Datalex

Assuming the 90 days trading horizon FD Technologies PLC is expected to under-perform the Datalex. But the stock apears to be less risky and, when comparing its historical volatility, FD Technologies PLC is 18.18 times less risky than Datalex. The stock trades about -0.21 of its potential returns per unit of risk. The Datalex is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  34.00  in Datalex on September 21, 2024 and sell it today you would earn a total of  2.00  from holding Datalex or generate 5.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

FD Technologies PLC  vs.  Datalex

FD Technologies PLC

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FD Technologies PLC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, FD Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

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 latest weak performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with FD Technologies and Datalex

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

The idea behind FD Technologies PLC and Datalex 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.