Correlation Between Digiwin Software and Chison Medical

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

Diversification Opportunities for Digiwin Software and Chison Medical

0.82

Correlation Coefficient

Digiwin Software  Chison Medical

Very poor diversification

The 3 months correlation between Digiwin and Chison is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Digiwin Software Co and Chison Medical Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chison Medical Techn 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 Chison Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chison Medical Techn has no effect on the direction of Digiwin Software i.e., Digiwin Software and Chison Medical go up and down completely randomly.

Pair Corralation between Digiwin Software and Chison Medical

Assuming the 90 days trading horizon Digiwin Software Co is expected to generate 1.26 times more return on investment than Chison Medical. However, Digiwin Software is 1.26 times more volatile than Chison Medical Technologies. It trades about 0.05 of its potential returns per unit of risk. Chison Medical Technologies is currently generating about -0.01 per unit of risk. If you would invest  1,800  in Digiwin Software Co on October 26, 2024 and sell it today you would earn a total of  1,416  from holding Digiwin Software Co or generate 78.67% return on investment over 90 days.

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

Digiwin Software Co  vs.  Chison Medical Technologies

Digiwin Software

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Digiwin Software Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Digiwin Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Chison Medical Techn

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chison Medical Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Chison Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Digiwin Software and Chison Medical

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

The idea behind Digiwin Software Co and Chison Medical Technologies 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.