Correlation Between Copa Holdings and DigiAsia Corp
Can any of the company-specific risk be diversified away by investing in both Copa Holdings and DigiAsia Corp 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 Copa Holdings and DigiAsia Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Copa Holdings SA and DigiAsia Corp, you can compare the effects of market volatilities on Copa Holdings and DigiAsia Corp 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 Copa Holdings with a short position of DigiAsia Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and DigiAsia Corp.
Diversification Opportunities for Copa Holdings and DigiAsia Corp
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Copa and DigiAsia is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and DigiAsia Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DigiAsia Corp and Copa Holdings 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 Copa Holdings SA are associated (or correlated) with DigiAsia Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DigiAsia Corp has no effect on the direction of Copa Holdings i.e., Copa Holdings and DigiAsia Corp go up and down completely randomly.
Pair Corralation between Copa Holdings and DigiAsia Corp
Considering the 90-day investment horizon Copa Holdings is expected to generate 43.22 times less return on investment than DigiAsia Corp. But when comparing it to its historical volatility, Copa Holdings SA is 11.5 times less risky than DigiAsia Corp. It trades about 0.03 of its potential returns per unit of risk. DigiAsia Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 5.20 in DigiAsia Corp on September 13, 2024 and sell it today you would earn a total of 2.30 from holding DigiAsia Corp or generate 44.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 32.39% |
| Values | Daily Returns |
Copa Holdings SA vs. DigiAsia Corp
Performance |
| Timeline |
| Copa Holdings SA |
| DigiAsia Corp |
Copa Holdings and DigiAsia Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copa Holdings and DigiAsia Corp
The main advantage of trading using opposite Copa Holdings and DigiAsia Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, DigiAsia Corp 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 DigiAsia Corp will offset losses from the drop in DigiAsia Corp's long position.| Copa Holdings vs. SkyWest | Copa Holdings vs. Sun Country Airlines | Copa Holdings vs. Air Transport Services | Copa Holdings vs. Frontier Group Holdings |
| DigiAsia Corp vs. Copa Holdings SA | DigiAsia Corp vs. Southwest Airlines | DigiAsia Corp vs. First Ship Lease | DigiAsia Corp vs. Ryanair Holdings PLC |
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 Stocks Directory module to find actively traded stocks across global markets.
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