Correlation Between ING Bank and Datawalk

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

By analyzing existing cross correlation between ING Bank lski and Datawalk SA, you can compare the effects of market volatilities on ING Bank and Datawalk 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 ING Bank with a short position of Datawalk. Check out your portfolio center. Please also check ongoing floating volatility patterns of ING Bank and Datawalk.

Diversification Opportunities for ING Bank and Datawalk

-0.64

Correlation Coefficient

ING Bank  Datawalk

Excellent diversification

The 3 months correlation between ING and Datawalk is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding ING Bank lski and Datawalk SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datawalk SA and ING Bank 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 ING Bank lski are associated (or correlated) with Datawalk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datawalk SA has no effect on the direction of ING Bank i.e., ING Bank and Datawalk go up and down completely randomly.

Pair Corralation between ING Bank and Datawalk

Assuming the 90 days trading horizon ING Bank lski is expected to under-perform the Datawalk. But the stock apears to be less risky and, when comparing its historical volatility, ING Bank lski is 2.68 times less risky than Datawalk. The stock trades about -0.03 of its potential returns per unit of risk. The Datawalk SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4,305  in Datawalk SA on September 16, 2024 and sell it today you would earn a total of  485.00  from holding Datawalk SA or generate 11.27% return on investment over 90 days.

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

ING Bank lski  vs.  Datawalk SA

ING Bank lski

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ING Bank lski has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, ING Bank is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Datawalk SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Datawalk SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Datawalk reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ING Bank and Datawalk

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

The idea behind ING Bank lski and Datawalk SA 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.