Correlation Between Digilife Technologies and NEW WORLD
Can any of the company-specific risk be diversified away by investing in both Digilife Technologies and NEW WORLD 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 Digilife Technologies and NEW WORLD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digilife Technologies Limited and NEW WORLD DEVCO, you can compare the effects of market volatilities on Digilife Technologies and NEW WORLD 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 Digilife Technologies with a short position of NEW WORLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digilife Technologies and NEW WORLD.
Diversification Opportunities for Digilife Technologies and NEW WORLD
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Digilife and NEW is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Digilife Technologies Limited and NEW WORLD DEVCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEW WORLD DEVCO and Digilife Technologies 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 Digilife Technologies Limited are associated (or correlated) with NEW WORLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEW WORLD DEVCO has no effect on the direction of Digilife Technologies i.e., Digilife Technologies and NEW WORLD go up and down completely randomly.
Pair Corralation between Digilife Technologies and NEW WORLD
Assuming the 90 days trading horizon Digilife Technologies Limited is expected to generate 1.37 times more return on investment than NEW WORLD. However, Digilife Technologies is 1.37 times more volatile than NEW WORLD DEVCO. It trades about 0.01 of its potential returns per unit of risk. NEW WORLD DEVCO is currently generating about -0.05 per unit of risk. If you would invest 96.00 in Digilife Technologies Limited on October 12, 2024 and sell it today you would lose (23.00) from holding Digilife Technologies Limited or give up 23.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digilife Technologies Limited vs. NEW WORLD DEVCO
Performance |
| Timeline |
| Digilife Technologies |
| NEW WORLD DEVCO |
Digilife Technologies and NEW WORLD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digilife Technologies and NEW WORLD
The main advantage of trading using opposite Digilife Technologies and NEW WORLD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digilife Technologies position performs unexpectedly, NEW WORLD 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 NEW WORLD will offset losses from the drop in NEW WORLD's long position.| Digilife Technologies vs. PSI Software AG | Digilife Technologies vs. Alfa Financial Software | Digilife Technologies vs. JAPAN AIRLINES | Digilife Technologies vs. United Airlines Holdings |
| NEW WORLD vs. AAC TECHNOLOGHLDGADR | NEW WORLD vs. Minerals Technologies | NEW WORLD vs. Digilife Technologies Limited | NEW WORLD vs. The Japan Steel |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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