Correlation Between SPORT LISBOA and Data Modul

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

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

Diversification Opportunities for SPORT LISBOA and Data Modul

0.53

Correlation Coefficient

SPORT LISBOA  Data Modul

Very weak diversification

The 3 months correlation between SPORT and Data is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding SPORT LISBOA E and Data Modul AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data Modul AG and SPORT LISBOA 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 SPORT LISBOA E are associated (or correlated) with Data Modul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data Modul AG has no effect on the direction of SPORT LISBOA i.e., SPORT LISBOA and Data Modul go up and down completely randomly.

Pair Corralation between SPORT LISBOA and Data Modul

Assuming the 90 days horizon SPORT LISBOA E is expected to generate 2.11 times more return on investment than Data Modul. However, SPORT LISBOA is 2.11 times more volatile than Data Modul AG. It trades about 0.17 of its potential returns per unit of risk. Data Modul AG is currently generating about -0.01 per unit of risk. If you would invest  370.00  in SPORT LISBOA E on April 21, 2025 and sell it today you would earn a total of  174.00  from holding SPORT LISBOA E or generate 47.03% return on investment over 90 days.

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

SPORT LISBOA E  vs.  Data Modul AG

SPORT LISBOA E

Risk-Adjusted Performance

Good

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

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.

Pair Trading with SPORT LISBOA and Data Modul

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

The idea behind SPORT LISBOA E and Data Modul AG 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.