Correlation Between Makita and Digilife Technologies
Can any of the company-specific risk be diversified away by investing in both Makita 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 Makita and Digilife Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Makita and Digilife Technologies Limited, you can compare the effects of market volatilities on Makita 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 Makita with a short position of Digilife Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Makita and Digilife Technologies.
Diversification Opportunities for Makita and Digilife Technologies
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Makita and Digilife is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Makita and Digilife Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digilife Technologies and Makita 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 Makita 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 Makita i.e., Makita and Digilife Technologies go up and down completely randomly.
Pair Corralation between Makita and Digilife Technologies
Assuming the 90 days trading horizon Makita is expected to generate 0.31 times more return on investment than Digilife Technologies. However, Makita is 3.23 times less risky than Digilife Technologies. It trades about 0.26 of its potential returns per unit of risk. Digilife Technologies Limited is currently generating about 0.0 per unit of risk. If you would invest 2,814 in Makita on September 12, 2024 and sell it today you would earn a total of 254.00 from holding Makita or generate 9.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Makita vs. Digilife Technologies Limited
Performance |
| Timeline |
| Makita |
| Digilife Technologies |
Makita and Digilife Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Makita and Digilife Technologies
The main advantage of trading using opposite Makita and Digilife Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Makita 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.| Makita vs. Ribbon Communications | Makita vs. SBI Insurance Group | Makita vs. China Communications Services | Makita vs. Spirent Communications plc |
| Digilife Technologies vs. Superior Plus Corp | Digilife Technologies vs. SIVERS SEMICONDUCTORS AB | Digilife Technologies vs. Norsk Hydro ASA | Digilife Technologies vs. Reliance Steel Aluminum |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |