Correlation Between Aspocomp Group and Digia Oyj

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

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

Diversification Opportunities for Aspocomp Group and Digia Oyj

0.58

Correlation Coefficient

Aspocomp Group  Digia Oyj

Very weak diversification

The 3 months correlation between Aspocomp and Digia is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Aspocomp Group Oyj and Digia Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digia Oyj and Aspocomp 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 Aspocomp Group Oyj are associated (or correlated) with Digia Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digia Oyj has no effect on the direction of Aspocomp Group i.e., Aspocomp Group and Digia Oyj go up and down completely randomly.

Pair Corralation between Aspocomp Group and Digia Oyj

Assuming the 90 days trading horizon Aspocomp Group is expected to generate 4.85 times less return on investment than Digia Oyj. In addition to that, Aspocomp Group is 1.47 times more volatile than Digia Oyj. It trades about 0.01 of its total potential returns per unit of risk. Digia Oyj is currently generating about 0.08 per unit of volatility. If you would invest  558.00  in Digia Oyj on October 9, 2024 and sell it today you would earn a total of  120.00  from holding Digia Oyj or generate 21.51% return on investment over 90 days.

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

Aspocomp Group Oyj  vs.  Digia Oyj

Aspocomp Group Oyj

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aspocomp Group Oyj are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Aspocomp Group demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Digia Oyj

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Digia Oyj are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Digia Oyj demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aspocomp Group and Digia Oyj

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

The idea behind Aspocomp Group Oyj and Digia Oyj 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.