Correlation Between Aware and INX Digital
Can any of the company-specific risk be diversified away by investing in both Aware and INX Digital 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 Aware and INX Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aware Inc and The INX Digital, you can compare the effects of market volatilities on Aware and INX Digital 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 Aware with a short position of INX Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aware and INX Digital.
Diversification Opportunities for Aware and INX Digital
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aware and INX is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Aware Inc and The INX Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INX Digital and Aware 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 Aware Inc are associated (or correlated) with INX Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INX Digital has no effect on the direction of Aware i.e., Aware and INX Digital go up and down completely randomly.
Pair Corralation between Aware and INX Digital
Given the investment horizon of 90 days Aware Inc is expected to under-perform the INX Digital. But the stock apears to be less risky and, when comparing its historical volatility, Aware Inc is 2.08 times less risky than INX Digital. The stock trades about -0.16 of its potential returns per unit of risk. The The INX Digital is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5.30 in The INX Digital on August 28, 2024 and sell it today you would earn a total of 0.13 from holding The INX Digital or generate 2.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aware Inc vs. The INX Digital
Performance |
| Timeline |
| Aware Inc |
| INX Digital |
Aware and INX Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aware and INX Digital
The main advantage of trading using opposite Aware and INX Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aware position performs unexpectedly, INX Digital 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 INX Digital will offset losses from the drop in INX Digital's long position.| Aware vs. Xcelmobility | Aware vs. Pushfor Investments | Aware vs. CurrentC Power | Aware vs. Agent Information Software |
| INX Digital vs. 01 Communique Laboratory | INX Digital vs. LifeSpeak | INX Digital vs. RESAAS Services | INX Digital vs. RenoWorks Software |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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