Correlation Between Data Modul and DATATEC

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

By analyzing existing cross correlation between Data Modul AG and DATATEC LTD 2, you can compare the effects of market volatilities on Data Modul and DATATEC 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 Data Modul with a short position of DATATEC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Data Modul and DATATEC.

Diversification Opportunities for Data Modul and DATATEC

0.6

Correlation Coefficient

Data Modul  DATATEC

Poor diversification

The 3 months correlation between Data and DATATEC is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Data Modul AG and DATATEC LTD 2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATATEC LTD 2 and Data Modul 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 Data Modul AG are associated (or correlated) with DATATEC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATATEC LTD 2 has no effect on the direction of Data Modul i.e., Data Modul and DATATEC go up and down completely randomly.

Pair Corralation between Data Modul and DATATEC

Assuming the 90 days trading horizon Data Modul AG is expected to under-perform the DATATEC. In addition to that, Data Modul is 1.17 times more volatile than DATATEC LTD 2. It trades about -0.02 of its total potential returns per unit of risk. DATATEC LTD 2 is currently generating about 0.18 per unit of volatility. If you would invest  488.00  in DATATEC LTD 2 on April 23, 2025 and sell it today you would earn a total of  92.00  from holding DATATEC LTD 2 or generate 18.85% return on investment over 90 days.

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

Data Modul AG  vs.  DATATEC LTD 2

Data Modul AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Data Modul AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Data Modul is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

DATATEC LTD 2

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DATATEC LTD 2 are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DATATEC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Data Modul and DATATEC

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

The idea behind Data Modul AG and DATATEC LTD 2 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.