Correlation Between Collins Foods and Digilife Technologies
Can any of the company-specific risk be diversified away by investing in both Collins Foods and Digilife Technologies 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 Collins Foods and Digilife Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collins Foods Limited and Digilife Technologies Limited, you can compare the effects of market volatilities on Collins Foods and Digilife Technologies 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 Collins Foods with a short position of Digilife Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collins Foods and Digilife Technologies.
Diversification Opportunities for Collins Foods and Digilife Technologies
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Collins and Digilife is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods Limited and Digilife Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digilife Technologies and Collins Foods 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 Collins Foods Limited are associated (or correlated) with Digilife Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digilife Technologies has no effect on the direction of Collins Foods i.e., Collins Foods and Digilife Technologies go up and down completely randomly.
Pair Corralation between Collins Foods and Digilife Technologies
Assuming the 90 days horizon Collins Foods Limited is expected to generate 0.34 times more return on investment than Digilife Technologies. However, Collins Foods Limited is 2.93 times less risky than Digilife Technologies. It trades about 0.2 of its potential returns per unit of risk. Digilife Technologies Limited is currently generating about 0.04 per unit of risk. If you would invest 494.00 in Collins Foods Limited on September 1, 2024 and sell it today you would earn a total of 36.00 from holding Collins Foods Limited or generate 7.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Collins Foods Limited vs. Digilife Technologies Limited
Performance |
| Timeline |
| Collins Foods Limited |
| Digilife Technologies |
Collins Foods and Digilife Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collins Foods and Digilife Technologies
The main advantage of trading using opposite Collins Foods and Digilife Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collins Foods position performs unexpectedly, Digilife Technologies 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 Digilife Technologies will offset losses from the drop in Digilife Technologies' long position.The idea behind Collins Foods Limited and Digilife Technologies Limited 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.| Digilife Technologies vs. ATT Inc | Digilife Technologies vs. Deutsche Telekom AG | Digilife Technologies vs. Superior Plus Corp | Digilife Technologies vs. NMI Holdings |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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