Correlation Between Digiwin Software and Westone Information

Can any of the company-specific risk be diversified away by investing in both Digiwin Software and Westone Information 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 Westone Information 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 Westone Information Industry, you can compare the effects of market volatilities on Digiwin Software and Westone Information 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 Westone Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digiwin Software and Westone Information.

Diversification Opportunities for Digiwin Software and Westone Information

0.37

Correlation Coefficient

Digiwin Software  Westone Information

Weak diversification

The 3 months correlation between Digiwin and Westone is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Digiwin Software Co and Westone Information Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westone Information 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 Westone Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westone Information has no effect on the direction of Digiwin Software i.e., Digiwin Software and Westone Information go up and down completely randomly.

Pair Corralation between Digiwin Software and Westone Information

Assuming the 90 days trading horizon Digiwin Software Co is expected to under-perform the Westone Information. In addition to that, Digiwin Software is 1.49 times more volatile than Westone Information Industry. It trades about -0.12 of its total potential returns per unit of risk. Westone Information Industry is currently generating about -0.16 per unit of volatility. If you would invest  1,716  in Westone Information Industry on October 25, 2024 and sell it today you would lose (135.00) from holding Westone Information Industry or give up 7.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Digiwin Software Co  vs.  Westone Information Industry

Digiwin Software

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Digiwin Software Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Digiwin Software may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Westone Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Westone Information Industry 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.

Pair Trading with Digiwin Software and Westone Information

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

The idea behind Digiwin Software Co and Westone Information Industry 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.