Correlation Between Nortech Systems and Data IO

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

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

Diversification Opportunities for Nortech Systems and Data IO

0.55

Correlation Coefficient

Nortech Systems  Data IO

Very weak diversification

The 3 months correlation between Nortech and Data is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Nortech Systems Incorporated and Data IO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data IO and Nortech Systems 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 Nortech Systems Incorporated are associated (or correlated) with Data IO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data IO has no effect on the direction of Nortech Systems i.e., Nortech Systems and Data IO go up and down completely randomly.

Pair Corralation between Nortech Systems and Data IO

Given the investment horizon of 90 days Nortech Systems Incorporated is expected to under-perform the Data IO. In addition to that, Nortech Systems is 1.34 times more volatile than Data IO. It trades about -0.08 of its total potential returns per unit of risk. Data IO is currently generating about -0.06 per unit of volatility. If you would invest  302.00  in Data IO on August 26, 2025 and sell it today you would lose (37.00) from holding Data IO or give up 12.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.63%
Values	Daily Returns

Nortech Systems Incorporated  vs.  Data IO

Nortech Systems

Risk-Adjusted Performance

Weakest

Over the last 90 days Nortech Systems Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Data IO

Risk-Adjusted Performance

Weakest

Over the last 90 days Data IO has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Nortech Systems and Data IO

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

The idea behind Nortech Systems Incorporated and Data IO 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.