Correlation Between Asahi Group and Digilife Technologies

Can any of the company-specific risk be diversified away by investing in both Asahi Group and Digilife Technologies 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 Asahi Group and Digilife Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asahi Group Holdings and Digilife Technologies Limited, you can compare the effects of market volatilities on Asahi Group and Digilife Technologies 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 Asahi Group with a short position of Digilife Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asahi Group and Digilife Technologies.

Diversification Opportunities for Asahi Group and Digilife Technologies

0.14

Correlation Coefficient

Asahi Group  Digilife Technologies

Average diversification

The 3 months correlation between Asahi and Digilife is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Asahi Group Holdings and Digilife Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digilife Technologies and Asahi Group 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 Asahi Group Holdings are associated (or correlated) with Digilife Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digilife Technologies has no effect on the direction of Asahi Group i.e., Asahi Group and Digilife Technologies go up and down completely randomly.

Pair Corralation between Asahi Group and Digilife Technologies

Assuming the 90 days horizon Asahi Group Holdings is expected to under-perform the Digilife Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Asahi Group Holdings is 1.84 times less risky than Digilife Technologies. The stock trades about -0.06 of its potential returns per unit of risk. The Digilife Technologies Limited is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  84.00  in Digilife Technologies Limited on September 5, 2024 and sell it today you would lose (10.00) from holding Digilife Technologies Limited or give up 11.9% of portfolio value over 90 days.

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

Asahi Group Holdings  vs.  Digilife Technologies Limited

Asahi Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asahi Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Digilife Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Digilife Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Asahi Group and Digilife Technologies

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

The idea behind Asahi Group Holdings and Digilife Technologies Limited 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.