Correlation Between Data Modul and Fortescue Metals

Can any of the company-specific risk be diversified away by investing in both Data Modul and Fortescue Metals 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 Fortescue Metals 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 Fortescue Metals Group, you can compare the effects of market volatilities on Data Modul and Fortescue Metals 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 Fortescue Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Data Modul and Fortescue Metals.

Diversification Opportunities for Data Modul and Fortescue Metals

0.35

Correlation Coefficient

Data Modul  Fortescue Metals

Weak diversification

The 3 months correlation between Data and Fortescue is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Data Modul AG and Fortescue Metals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortescue Metals 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 Fortescue Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortescue Metals has no effect on the direction of Data Modul i.e., Data Modul and Fortescue Metals go up and down completely randomly.

Pair Corralation between Data Modul and Fortescue Metals

Assuming the 90 days trading horizon Data Modul is expected to generate 1.75 times less return on investment than Fortescue Metals. But when comparing it to its historical volatility, Data Modul AG is 1.02 times less risky than Fortescue Metals. It trades about 0.05 of its potential returns per unit of risk. Fortescue Metals Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  948.00  in Fortescue Metals Group on May 12, 2025 and sell it today you would earn a total of  105.00  from holding Fortescue Metals Group or generate 11.08% return on investment over 90 days.

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

Data Modul AG  vs.  Fortescue Metals Group

Data Modul AG

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Data Modul AG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile primary indicators, Data Modul may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Fortescue Metals

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Fortescue Metals Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Fortescue Metals may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Data Modul and Fortescue Metals

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

The idea behind Data Modul AG and Fortescue Metals Group 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.