Correlation Between Aurora Optoelectronics and Digiwin Software
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By analyzing existing cross correlation between Aurora Optoelectronics Co and Digiwin Software Co, you can compare the effects of market volatilities on Aurora Optoelectronics and Digiwin Software 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 Aurora Optoelectronics with a short position of Digiwin Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Optoelectronics and Digiwin Software.
Diversification Opportunities for Aurora Optoelectronics and Digiwin Software
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aurora and Digiwin is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Optoelectronics Co and Digiwin Software Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digiwin Software and Aurora Optoelectronics 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 Aurora Optoelectronics Co are associated (or correlated) with Digiwin Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digiwin Software has no effect on the direction of Aurora Optoelectronics i.e., Aurora Optoelectronics and Digiwin Software go up and down completely randomly.
Pair Corralation between Aurora Optoelectronics and Digiwin Software
Assuming the 90 days trading horizon Aurora Optoelectronics is expected to generate 4.33 times less return on investment than Digiwin Software. But when comparing it to its historical volatility, Aurora Optoelectronics Co is 1.15 times less risky than Digiwin Software. It trades about 0.02 of its potential returns per unit of risk. Digiwin Software Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,014 in Digiwin Software Co on October 30, 2024 and sell it today you would earn a total of 1,278 from holding Digiwin Software Co or generate 63.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurora Optoelectronics Co vs. Digiwin Software Co
Performance |
| Timeline |
| Aurora Optoelectronics |
| Digiwin Software |
Aurora Optoelectronics and Digiwin Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Optoelectronics and Digiwin Software
The main advantage of trading using opposite Aurora Optoelectronics and Digiwin Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Optoelectronics position performs unexpectedly, Digiwin Software 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 Digiwin Software will offset losses from the drop in Digiwin Software's long position.The idea behind Aurora Optoelectronics Co and Digiwin Software Co 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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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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