Correlation Between Datalex and AIB Group

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

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

Diversification Opportunities for Datalex and AIB Group

-0.89

Correlation Coefficient

Datalex  AIB Group

Pay attention - limited upside

The 3 months correlation between Datalex and AIB is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Datalex and AIB Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIB Group PLC and Datalex 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 Datalex are associated (or correlated) with AIB Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIB Group PLC has no effect on the direction of Datalex i.e., Datalex and AIB Group go up and down completely randomly.

Pair Corralation between Datalex and AIB Group

Assuming the 90 days trading horizon Datalex is expected to under-perform the AIB Group. In addition to that, Datalex is 1.66 times more volatile than AIB Group PLC. It trades about -0.03 of its total potential returns per unit of risk. AIB Group PLC is currently generating about 0.06 per unit of volatility. If you would invest  477.00  in AIB Group PLC on January 31, 2024 and sell it today you would earn a total of  9.00  from holding AIB Group PLC or generate 1.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Datalex  vs.  AIB Group PLC

Datalex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Datalex has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in May 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

AIB Group PLC

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AIB Group PLC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, AIB Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Datalex and AIB Group

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

The idea behind Datalex and AIB Group PLC 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.