Correlation Between GRUPUL INDUSTRIAL and Digi Communications
Can any of the company-specific risk be diversified away by investing in both GRUPUL INDUSTRIAL and Digi Communications 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 GRUPUL INDUSTRIAL and Digi Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GRUPUL INDUSTRIAL ELECTROCONTACT and Digi Communications NV, you can compare the effects of market volatilities on GRUPUL INDUSTRIAL and Digi Communications 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 GRUPUL INDUSTRIAL with a short position of Digi Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of GRUPUL INDUSTRIAL and Digi Communications.
Diversification Opportunities for GRUPUL INDUSTRIAL and Digi Communications
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GRUPUL and Digi is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding GRUPUL INDUSTRIAL ELECTROCONTA and Digi Communications NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digi Communications and GRUPUL INDUSTRIAL 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 GRUPUL INDUSTRIAL ELECTROCONTACT are associated (or correlated) with Digi Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digi Communications has no effect on the direction of GRUPUL INDUSTRIAL i.e., GRUPUL INDUSTRIAL and Digi Communications go up and down completely randomly.
Pair Corralation between GRUPUL INDUSTRIAL and Digi Communications
Assuming the 90 days trading horizon GRUPUL INDUSTRIAL ELECTROCONTACT is expected to generate 3.39 times more return on investment than Digi Communications. However, GRUPUL INDUSTRIAL is 3.39 times more volatile than Digi Communications NV. It trades about 0.06 of its potential returns per unit of risk. Digi Communications NV is currently generating about 0.12 per unit of risk. If you would invest 2.80 in GRUPUL INDUSTRIAL ELECTROCONTACT on August 25, 2024 and sell it today you would earn a total of 1.70 from holding GRUPUL INDUSTRIAL ELECTROCONTACT or generate 60.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 52.32% |
| Values | Daily Returns |
GRUPUL INDUSTRIAL ELECTROCONTA vs. Digi Communications NV
Performance |
| Timeline |
| GRUPUL INDUSTRIAL |
| Digi Communications |
GRUPUL INDUSTRIAL and Digi Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GRUPUL INDUSTRIAL and Digi Communications
The main advantage of trading using opposite GRUPUL INDUSTRIAL and Digi Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GRUPUL INDUSTRIAL position performs unexpectedly, Digi Communications 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 Digi Communications will offset losses from the drop in Digi Communications' long position.| GRUPUL INDUSTRIAL vs. IHUNT TECHNOLOGY IMPORT EXPORT | GRUPUL INDUSTRIAL vs. AROBS TRANSILVANIA SOFTWARE | GRUPUL INDUSTRIAL vs. TRANSILVANIA LEASING SI | GRUPUL INDUSTRIAL vs. Infinity Capital Investments |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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