Correlation Between Data Modul and ON SEMICONDUCTOR

Can any of the company-specific risk be diversified away by investing in both Data Modul and ON SEMICONDUCTOR 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 ON SEMICONDUCTOR 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 ON SEMICONDUCTOR, you can compare the effects of market volatilities on Data Modul and ON SEMICONDUCTOR 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 ON SEMICONDUCTOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Data Modul and ON SEMICONDUCTOR.

Diversification Opportunities for Data Modul and ON SEMICONDUCTOR

0.4

Correlation Coefficient

Data Modul  ON SEMICONDUCTOR

Very weak diversification

The 3 months correlation between Data and XS4 is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Data Modul AG and ON SEMICONDUCTOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ON SEMICONDUCTOR 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 ON SEMICONDUCTOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ON SEMICONDUCTOR has no effect on the direction of Data Modul i.e., Data Modul and ON SEMICONDUCTOR go up and down completely randomly.

Pair Corralation between Data Modul and ON SEMICONDUCTOR

Assuming the 90 days trading horizon Data Modul AG is expected to under-perform the ON SEMICONDUCTOR. But the stock apears to be less risky and, when comparing its historical volatility, Data Modul AG is 1.68 times less risky than ON SEMICONDUCTOR. The stock trades about -0.01 of its potential returns per unit of risk. The ON SEMICONDUCTOR is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  3,097  in ON SEMICONDUCTOR on April 22, 2025 and sell it today you would earn a total of  2,125  from holding ON SEMICONDUCTOR or generate 68.61% return on investment over 90 days.

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

Data Modul AG  vs.  ON SEMICONDUCTOR

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.

ON SEMICONDUCTOR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ON SEMICONDUCTOR are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ON SEMICONDUCTOR unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Data Modul and ON SEMICONDUCTOR

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

The idea behind Data Modul AG and ON SEMICONDUCTOR 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.