Correlation Between EAGLE MATERIALS and DOCDATA

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

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

Diversification Opportunities for EAGLE MATERIALS and DOCDATA

0.5

Correlation Coefficient

EAGLE MATERIALS  DOCDATA

Very weak diversification

The 3 months correlation between EAGLE and DOCDATA is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and DOCDATA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOCDATA and EAGLE MATERIALS 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 EAGLE MATERIALS 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 EAGLE MATERIALS i.e., EAGLE MATERIALS and DOCDATA go up and down completely randomly.

Pair Corralation between EAGLE MATERIALS and DOCDATA

Assuming the 90 days trading horizon EAGLE MATERIALS is expected to generate 18.52 times less return on investment than DOCDATA. But when comparing it to its historical volatility, EAGLE MATERIALS is 1.58 times less risky than DOCDATA. It trades about 0.0 of its potential returns per unit of risk. DOCDATA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  35.00  in DOCDATA on April 21, 2025 and sell it today you would earn a total of  2.00  from holding DOCDATA or generate 5.71% return on investment over 90 days.

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

EAGLE MATERIALS  vs.  DOCDATA

EAGLE MATERIALS

Risk-Adjusted Performance

Very Weak

Over the last 90 days EAGLE MATERIALS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, EAGLE MATERIALS is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

DOCDATA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DOCDATA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, DOCDATA may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with EAGLE MATERIALS and DOCDATA

The main advantage of trading using opposite EAGLE MATERIALS and DOCDATA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAGLE MATERIALS 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 EAGLE MATERIALS 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.