Correlation Between Eugene Investment and Digital Power

Can any of the company-specific risk be diversified away by investing in both Eugene Investment and Digital Power 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 Eugene Investment and Digital Power into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eugene Investment Securities and Digital Power Communications, you can compare the effects of market volatilities on Eugene Investment and Digital Power 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 Eugene Investment with a short position of Digital Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eugene Investment and Digital Power.

Diversification Opportunities for Eugene Investment and Digital Power

-0.23

Correlation Coefficient

Eugene Investment  Digital Power

Very good diversification

The 3 months correlation between Eugene and Digital is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Eugene Investment Securities and Digital Power Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Power Commun and Eugene Investment 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 Eugene Investment Securities are associated (or correlated) with Digital Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Power Commun has no effect on the direction of Eugene Investment i.e., Eugene Investment and Digital Power go up and down completely randomly.

Pair Corralation between Eugene Investment and Digital Power

Assuming the 90 days trading horizon Eugene Investment Securities is expected to under-perform the Digital Power. In addition to that, Eugene Investment is 1.41 times more volatile than Digital Power Communications. It trades about -0.28 of its total potential returns per unit of risk. Digital Power Communications is currently generating about 0.09 per unit of volatility. If you would invest  788,000  in Digital Power Communications on September 16, 2024 and sell it today you would earn a total of  85,000  from holding Digital Power Communications or generate 10.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Eugene Investment Securities  vs.  Digital Power Communications

Eugene Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eugene Investment Securities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Digital Power Commun

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Digital Power Communications are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Digital Power may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Eugene Investment and Digital Power

The main advantage of trading using opposite Eugene Investment and Digital Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eugene Investment position performs unexpectedly, Digital Power 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 Digital Power will offset losses from the drop in Digital Power's long position.

The idea behind Eugene Investment Securities and Digital Power Communications 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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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.