Correlation Between DATATRAK International and Creative Realities

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

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

Diversification Opportunities for DATATRAK International and Creative Realities

-0.57

Correlation Coefficient

DATATRAK International  Creative Realities

Excellent diversification

The 3 months correlation between DATATRAK and Creative is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding DATATRAK International and Creative Realities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Creative Realities and DATATRAK International 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 DATATRAK International are associated (or correlated) with Creative Realities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Creative Realities has no effect on the direction of DATATRAK International i.e., DATATRAK International and Creative Realities go up and down completely randomly.

Pair Corralation between DATATRAK International and Creative Realities

Given the investment horizon of 90 days DATATRAK International is expected to generate 3.21 times more return on investment than Creative Realities. However, DATATRAK International is 3.21 times more volatile than Creative Realities. It trades about 0.06 of its potential returns per unit of risk. Creative Realities is currently generating about 0.07 per unit of risk. If you would invest  125.00  in DATATRAK International on February 9, 2024 and sell it today you would lose (20.00) from holding DATATRAK International or give up 16.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	20.15%
Values	Daily Returns

DATATRAK International  vs.  Creative Realities

DATATRAK International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DATATRAK International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, DATATRAK International is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Creative Realities

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Creative Realities are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Creative Realities showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DATATRAK International and Creative Realities

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

The idea behind DATATRAK International and Creative Realities 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.