Correlation Between H2O Retailing and Datadog

Can any of the company-specific risk be diversified away by investing in both H2O Retailing and Datadog 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 H2O Retailing and Datadog into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between H2O Retailing and Datadog, you can compare the effects of market volatilities on H2O Retailing and Datadog 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 H2O Retailing with a short position of Datadog. Check out your portfolio center. Please also check ongoing floating volatility patterns of H2O Retailing and Datadog.

Diversification Opportunities for H2O Retailing and Datadog

-0.52

Correlation Coefficient

H2O Retailing  Datadog

Excellent diversification

The 3 months correlation between H2O and Datadog is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding H2O Retailing and Datadog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datadog and H2O Retailing 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 H2O Retailing are associated (or correlated) with Datadog. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datadog has no effect on the direction of H2O Retailing i.e., H2O Retailing and Datadog go up and down completely randomly.

Pair Corralation between H2O Retailing and Datadog

Assuming the 90 days horizon H2O Retailing is expected to generate 9.96 times less return on investment than Datadog. But when comparing it to its historical volatility, H2O Retailing is 4.25 times less risky than Datadog. It trades about 0.04 of its potential returns per unit of risk. Datadog is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  11,430  in Datadog on April 25, 2025 and sell it today you would earn a total of  976.00  from holding Datadog or generate 8.54% return on investment over 90 days.

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

H2O Retailing  vs.  Datadog

H2O Retailing

Risk-Adjusted Performance

Very Weak

Over the last 90 days H2O Retailing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, H2O Retailing is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Datadog

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Datadog are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Datadog reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with H2O Retailing and Datadog

The main advantage of trading using opposite H2O Retailing and Datadog positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H2O Retailing position performs unexpectedly, Datadog 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 Datadog will offset losses from the drop in Datadog's long position.

The idea behind H2O Retailing and Datadog 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.