Correlation Between Sysage Technology and Digital China

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

By analyzing existing cross correlation between Sysage Technology Co and Digital China Holdings, you can compare the effects of market volatilities on Sysage Technology and Digital China 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 Sysage Technology with a short position of Digital China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sysage Technology and Digital China.

Diversification Opportunities for Sysage Technology and Digital China

0.55

Correlation Coefficient

Sysage Technology  Digital China

Very weak diversification

The 3 months correlation between Sysage and Digital is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Sysage Technology Co and Digital China Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital China Holdings and Sysage Technology 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 Sysage Technology Co are associated (or correlated) with Digital China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital China Holdings has no effect on the direction of Sysage Technology i.e., Sysage Technology and Digital China go up and down completely randomly.

Pair Corralation between Sysage Technology and Digital China

Assuming the 90 days trading horizon Sysage Technology Co is expected to generate 1.48 times more return on investment than Digital China. However, Sysage Technology is 1.48 times more volatile than Digital China Holdings. It trades about 0.11 of its potential returns per unit of risk. Digital China Holdings is currently generating about 0.13 per unit of risk. If you would invest  4,715  in Sysage Technology Co on September 22, 2024 and sell it today you would earn a total of  415.00  from holding Sysage Technology Co or generate 8.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Sysage Technology Co  vs.  Digital China Holdings

Sysage Technology

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sysage Technology Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sysage Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Digital China Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Digital China Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Digital China may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sysage Technology and Digital China

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

The idea behind Sysage Technology Co and Digital China Holdings 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.