Correlation Between Data Modul and Data3

Can any of the company-specific risk be diversified away by investing in both Data Modul and Data3 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 Data Modul and Data3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Data Modul AG and Data3 Limited, you can compare the effects of market volatilities on Data Modul and Data3 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 Data Modul with a short position of Data3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Data Modul and Data3.

Diversification Opportunities for Data Modul and Data3

0.06

Correlation Coefficient

Data Modul  Data3

Significant diversification

The 3 months correlation between Data and Data3 is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Data Modul AG and Data3 Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data3 Limited and Data Modul 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 Data Modul AG are associated (or correlated) with Data3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data3 Limited has no effect on the direction of Data Modul i.e., Data Modul and Data3 go up and down completely randomly.

Pair Corralation between Data Modul and Data3

Assuming the 90 days trading horizon Data Modul is expected to generate 8.08 times less return on investment than Data3. But when comparing it to its historical volatility, Data Modul AG is 1.01 times less risky than Data3. It trades about 0.02 of its potential returns per unit of risk. Data3 Limited is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  408.00  in Data3 Limited on July 4, 2025 and sell it today you would earn a total of  97.00  from holding Data3 Limited or generate 23.77% return on investment over 90 days.

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

Data Modul AG  vs.  Data3 Limited

Data Modul AG

Risk-Adjusted Performance

Weakest

Compared to the overall equity markets, risk-adjusted returns on investments in Data Modul AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Data Modul is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Data3 Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Data3 Limited are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Data3 reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Data Modul and Data3

The main advantage of trading using opposite Data Modul and Data3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Data Modul position performs unexpectedly, Data3 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 Data3 will offset losses from the drop in Data3's long position.

The idea behind Data Modul AG and Data3 Limited 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.