Correlation Between Digi Communications and Aerostar Bacau
Can any of the company-specific risk be diversified away by investing in both Digi Communications and Aerostar Bacau 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 Digi Communications and Aerostar Bacau into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digi Communications NV and Aerostar Bacau, you can compare the effects of market volatilities on Digi Communications and Aerostar Bacau 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 Digi Communications with a short position of Aerostar Bacau. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digi Communications and Aerostar Bacau.
Diversification Opportunities for Digi Communications and Aerostar Bacau
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Digi and Aerostar is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Digi Communications NV and Aerostar Bacau in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerostar Bacau and Digi Communications 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 Digi Communications NV are associated (or correlated) with Aerostar Bacau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerostar Bacau has no effect on the direction of Digi Communications i.e., Digi Communications and Aerostar Bacau go up and down completely randomly.
Pair Corralation between Digi Communications and Aerostar Bacau
Assuming the 90 days trading horizon Digi Communications NV is expected to generate 0.73 times more return on investment than Aerostar Bacau. However, Digi Communications NV is 1.37 times less risky than Aerostar Bacau. It trades about 0.11 of its potential returns per unit of risk. Aerostar Bacau is currently generating about 0.02 per unit of risk. If you would invest 3,270 in Digi Communications NV on August 31, 2024 and sell it today you would earn a total of 3,050 from holding Digi Communications NV or generate 93.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.95% |
| Values | Daily Returns |
Digi Communications NV vs. Aerostar Bacau
Performance |
| Timeline |
| Digi Communications |
| Aerostar Bacau |
Digi Communications and Aerostar Bacau Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digi Communications and Aerostar Bacau
The main advantage of trading using opposite Digi Communications and Aerostar Bacau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digi Communications position performs unexpectedly, Aerostar Bacau 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 Aerostar Bacau will offset losses from the drop in Aerostar Bacau's long position.| Digi Communications vs. Teraplast Bist | Digi Communications vs. Electroarges S | Digi Communications vs. Comvex SA | Digi Communications vs. Feper SA |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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