Correlation Between Axcelis Technologies and Digilife Technologies
Can any of the company-specific risk be diversified away by investing in both Axcelis Technologies 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 Axcelis Technologies and Digilife Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axcelis Technologies and Digilife Technologies Limited, you can compare the effects of market volatilities on Axcelis Technologies 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 Axcelis Technologies with a short position of Digilife Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axcelis Technologies and Digilife Technologies.
Diversification Opportunities for Axcelis Technologies and Digilife Technologies
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Axcelis and Digilife is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Axcelis Technologies and Digilife Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digilife Technologies and Axcelis 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 Axcelis Technologies 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 Axcelis Technologies i.e., Axcelis Technologies and Digilife Technologies go up and down completely randomly.
Pair Corralation between Axcelis Technologies and Digilife Technologies
Assuming the 90 days trading horizon Axcelis Technologies is expected to under-perform the Digilife Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Axcelis Technologies is 1.49 times less risky than Digilife Technologies. The stock trades about -0.04 of its potential returns per unit of risk. The Digilife Technologies Limited is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 138.00 in Digilife Technologies Limited on December 4, 2024 and sell it today you would lose (75.00) from holding Digilife Technologies Limited or give up 54.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Axcelis Technologies vs. Digilife Technologies Limited
Performance |
| Timeline |
| Axcelis Technologies |
| Digilife Technologies |
Axcelis Technologies and Digilife Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axcelis Technologies and Digilife Technologies
The main advantage of trading using opposite Axcelis Technologies and Digilife Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axcelis Technologies 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.The idea behind Axcelis Technologies and Digilife Technologies Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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