Correlation Between Altria and DATATEC

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

By analyzing existing cross correlation between Altria Group and DATATEC LTD 2, you can compare the effects of market volatilities on Altria and DATATEC 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 Altria with a short position of DATATEC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altria and DATATEC.

Diversification Opportunities for Altria and DATATEC

-0.6

Correlation Coefficient

Altria  DATATEC

Excellent diversification

The 3 months correlation between Altria and DATATEC is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Altria Group and DATATEC LTD 2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATATEC LTD 2 and Altria 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 Altria Group are associated (or correlated) with DATATEC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATATEC LTD 2 has no effect on the direction of Altria i.e., Altria and DATATEC go up and down completely randomly.

Pair Corralation between Altria and DATATEC

Assuming the 90 days trading horizon Altria Group is expected to generate 0.81 times more return on investment than DATATEC. However, Altria Group is 1.24 times less risky than DATATEC. It trades about 0.12 of its potential returns per unit of risk. DATATEC LTD 2 is currently generating about -0.06 per unit of risk. If you would invest  5,113  in Altria Group on May 15, 2025 and sell it today you would earn a total of  533.00  from holding Altria Group or generate 10.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Altria Group  vs.  DATATEC LTD 2

Altria Group

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Altria Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Altria may actually be approaching a critical reversion point that can send shares even higher in September 2025.

DATATEC LTD 2

Risk-Adjusted Performance

Weakest

Over the last 90 days DATATEC LTD 2 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Altria and DATATEC

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

The idea behind Altria Group and DATATEC LTD 2 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 Transaction History module to view history of all your transactions and understand their impact on performance.