Correlation Between Digiwin Software and Aerospace

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

By analyzing existing cross correlation between Digiwin Software Co and Aerospace Hi Tech Holding, you can compare the effects of market volatilities on Digiwin Software and Aerospace 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 Digiwin Software with a short position of Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digiwin Software and Aerospace.

Diversification Opportunities for Digiwin Software and Aerospace

0.4

Correlation Coefficient

Digiwin Software  Aerospace

Very weak diversification

The 3 months correlation between Digiwin and Aerospace is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Digiwin Software Co and Aerospace Hi Tech Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerospace Hi Tech and Digiwin Software 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 Digiwin Software Co are associated (or correlated) with Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerospace Hi Tech has no effect on the direction of Digiwin Software i.e., Digiwin Software and Aerospace go up and down completely randomly.

Pair Corralation between Digiwin Software and Aerospace

Assuming the 90 days trading horizon Digiwin Software Co is expected to generate 1.37 times more return on investment than Aerospace. However, Digiwin Software is 1.37 times more volatile than Aerospace Hi Tech Holding. It trades about -0.03 of its potential returns per unit of risk. Aerospace Hi Tech Holding is currently generating about -0.07 per unit of risk. If you would invest  2,721  in Digiwin Software Co on October 6, 2024 and sell it today you would lose (418.00) from holding Digiwin Software Co or give up 15.36% of portfolio value over 90 days.

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

Digiwin Software Co  vs.  Aerospace Hi Tech Holding

Digiwin Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Digiwin Software Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Aerospace Hi Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aerospace Hi Tech Holding 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Digiwin Software and Aerospace

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

The idea behind Digiwin Software Co and Aerospace Hi Tech Holding 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.