Correlation Between HeiTech Padu and Digistar Bhd

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

By analyzing existing cross correlation between HeiTech Padu Bhd and Digistar Bhd, you can compare the effects of market volatilities on HeiTech Padu and Digistar Bhd 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 HeiTech Padu with a short position of Digistar Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of HeiTech Padu and Digistar Bhd.

Diversification Opportunities for HeiTech Padu and Digistar Bhd

0.37

Correlation Coefficient

HeiTech Padu  Digistar Bhd

Weak diversification

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

Pair Corralation between HeiTech Padu and Digistar Bhd

Assuming the 90 days trading horizon HeiTech Padu Bhd is expected to generate 0.91 times more return on investment than Digistar Bhd. However, HeiTech Padu Bhd is 1.1 times less risky than Digistar Bhd. It trades about 0.07 of its potential returns per unit of risk. Digistar Bhd is currently generating about 0.01 per unit of risk. If you would invest  89.00  in HeiTech Padu Bhd on October 23, 2024 and sell it today you would earn a total of  181.00  from holding HeiTech Padu Bhd or generate 203.37% return on investment over 90 days.

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

HeiTech Padu Bhd  vs.  Digistar Bhd

HeiTech Padu Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HeiTech Padu Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Digistar Bhd

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with HeiTech Padu and Digistar Bhd

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

The idea behind HeiTech Padu Bhd and Digistar Bhd 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.