Correlation Between Summit Hotel and Digilife Technologies
Can any of the company-specific risk be diversified away by investing in both Summit Hotel 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 Summit Hotel and Digilife Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Hotel Properties and Digilife Technologies Limited, you can compare the effects of market volatilities on Summit Hotel 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 Summit Hotel with a short position of Digilife Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Digilife Technologies.
Diversification Opportunities for Summit Hotel and Digilife Technologies
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Summit and Digilife is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Digilife Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digilife Technologies and Summit Hotel 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 Summit Hotel Properties 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 Summit Hotel i.e., Summit Hotel and Digilife Technologies go up and down completely randomly.
Pair Corralation between Summit Hotel and Digilife Technologies
Assuming the 90 days horizon Summit Hotel Properties is expected to generate 0.44 times more return on investment than Digilife Technologies. However, Summit Hotel Properties is 2.27 times less risky than Digilife Technologies. It trades about 0.07 of its potential returns per unit of risk. Digilife Technologies Limited is currently generating about -0.02 per unit of risk. If you would invest 550.00 in Summit Hotel Properties on October 26, 2024 and sell it today you would earn a total of 90.00 from holding Summit Hotel Properties or generate 16.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Hotel Properties vs. Digilife Technologies Limited
Performance |
| Timeline |
| Summit Hotel Properties |
| Digilife Technologies |
Summit Hotel and Digilife Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and Digilife Technologies
The main advantage of trading using opposite Summit Hotel and Digilife Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel 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.| Summit Hotel vs. Micron Technology | Summit Hotel vs. AECOM TECHNOLOGY | Summit Hotel vs. GEAR4MUSIC LS 10 | Summit Hotel vs. Western Copper and |
| Digilife Technologies vs. T Mobile | Digilife Technologies vs. China Mobile Limited | Digilife Technologies vs. Verizon Communications | Digilife Technologies vs. ATT Inc |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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