Correlation Between Shanghai Action and Digiwin Software

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

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

Diversification Opportunities for Shanghai Action and Digiwin Software

-0.33

Correlation Coefficient

Shanghai Action  Digiwin Software

Very good diversification

The 3 months correlation between Shanghai and Digiwin is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Action Education and Digiwin Software Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digiwin Software and Shanghai Action 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 Shanghai Action Education are associated (or correlated) with Digiwin Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digiwin Software has no effect on the direction of Shanghai Action i.e., Shanghai Action and Digiwin Software go up and down completely randomly.

Pair Corralation between Shanghai Action and Digiwin Software

Assuming the 90 days trading horizon Shanghai Action Education is expected to generate 0.74 times more return on investment than Digiwin Software. However, Shanghai Action Education is 1.35 times less risky than Digiwin Software. It trades about -0.01 of its potential returns per unit of risk. Digiwin Software Co is currently generating about -0.5 per unit of risk. If you would invest  3,616  in Shanghai Action Education on October 9, 2024 and sell it today you would lose (31.00) from holding Shanghai Action Education or give up 0.86% of portfolio value over 90 days.

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

Shanghai Action Education  vs.  Digiwin Software Co

Shanghai Action Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shanghai Action Education has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Shanghai Action is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 somewhat strong basic indicators, Digiwin Software is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Shanghai Action and Digiwin Software

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

The idea behind Shanghai Action Education and Digiwin Software Co 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.