Correlation Between TELES Informationstech and DOCDATA

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

By analyzing existing cross correlation between TELES Informationstechnologien AG and DOCDATA, you can compare the effects of market volatilities on TELES Informationstech and DOCDATA 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 TELES Informationstech with a short position of DOCDATA. Check out your portfolio center. Please also check ongoing floating volatility patterns of TELES Informationstech and DOCDATA.

Diversification Opportunities for TELES Informationstech and DOCDATA

0.84

Correlation Coefficient

TELES Informationstech  DOCDATA

Very poor diversification

The 3 months correlation between TELES and DOCDATA is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding TELES Informationstechnologien and DOCDATA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOCDATA and TELES Informationstech 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 TELES Informationstechnologien AG are associated (or correlated) with DOCDATA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOCDATA has no effect on the direction of TELES Informationstech i.e., TELES Informationstech and DOCDATA go up and down completely randomly.

Pair Corralation between TELES Informationstech and DOCDATA

Assuming the 90 days trading horizon TELES Informationstechnologien AG is expected to under-perform the DOCDATA. But the stock apears to be less risky and, when comparing its historical volatility, TELES Informationstechnologien AG is 1.19 times less risky than DOCDATA. The stock trades about -0.14 of its potential returns per unit of risk. The DOCDATA is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  49.00  in DOCDATA on September 3, 2024 and sell it today you would lose (6.00) from holding DOCDATA or give up 12.24% of portfolio value over 90 days.

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

TELES Informationstechnologien  vs.  DOCDATA

TELES Informationstech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TELES Informationstechnologien AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward-looking signals remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

DOCDATA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DOCDATA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with TELES Informationstech and DOCDATA

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

The idea behind TELES Informationstechnologien AG and DOCDATA 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 CEOs Directory module to screen CEOs from public companies around the world.