Correlation Between Datamatics Global and Parag Milk

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

By analyzing existing cross correlation between Datamatics Global Services and Parag Milk Foods, you can compare the effects of market volatilities on Datamatics Global and Parag Milk 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 Datamatics Global with a short position of Parag Milk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datamatics Global and Parag Milk.

Diversification Opportunities for Datamatics Global and Parag Milk

0.7

Correlation Coefficient

Datamatics Global  Parag Milk

Poor diversification

The 3 months correlation between Datamatics and Parag is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Datamatics Global Services and Parag Milk Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parag Milk Foods and Datamatics Global 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 Datamatics Global Services are associated (or correlated) with Parag Milk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parag Milk Foods has no effect on the direction of Datamatics Global i.e., Datamatics Global and Parag Milk go up and down completely randomly.

Pair Corralation between Datamatics Global and Parag Milk

Assuming the 90 days trading horizon Datamatics Global is expected to generate 1.18 times less return on investment than Parag Milk. But when comparing it to its historical volatility, Datamatics Global Services is 1.08 times less risky than Parag Milk. It trades about 0.15 of its potential returns per unit of risk. Parag Milk Foods is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  19,253  in Parag Milk Foods on April 22, 2025 and sell it today you would earn a total of  6,264  from holding Parag Milk Foods or generate 32.54% return on investment over 90 days.

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

Datamatics Global Services  vs.  Parag Milk Foods

Datamatics Global

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Datamatics Global Services are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward indicators, Datamatics Global unveiled solid returns over the last few months and may actually be approaching a breakup point.

Parag Milk Foods

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Parag Milk Foods are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Parag Milk demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Datamatics Global and Parag Milk

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

The idea behind Datamatics Global Services and Parag Milk Foods 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.

Check out your portfolio center.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.