Correlation Between Acm Research and Digi International

Can any of the company-specific risk be diversified away by investing in both Acm Research and Digi International 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 Acm Research and Digi International into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Acm Research and Digi International

0.3

Correlation Coefficient

Acm Research  Digi International

Weak diversification

The 3 months correlation between Acm and Digi is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Acm Research and Digi International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digi International and Acm Research 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 Acm Research are associated (or correlated) with Digi International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digi International has no effect on the direction of Acm Research i.e., Acm Research and Digi International go up and down completely randomly.

Pair Corralation between Acm Research and Digi International

Given the investment horizon of 90 days Acm Research is expected to generate 1.5 times more return on investment than Digi International. However, Acm Research is 1.5 times more volatile than Digi International. It trades about 0.08 of its potential returns per unit of risk. Digi International is currently generating about 0.06 per unit of risk. If you would invest  1,915  in Acm Research on November 19, 2024 and sell it today you would earn a total of  463.00  from holding Acm Research or generate 24.18% return on investment over 90 days.

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

Acm Research  vs.  Digi International

Acm Research

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Acm Research are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain primary indicators, Acm Research reported solid returns over the last few months and may actually be approaching a breakup point.

Digi International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Digi International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Digi International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Acm Research and Digi International

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

The idea behind Acm Research and Digi International 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.