Correlation Between Centurion Acquisition and Digi International

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

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

Diversification Opportunities for Centurion Acquisition and Digi International

-0.16

Correlation Coefficient

Centurion Acquisition  Digi International

Good diversification

The 3 months correlation between Centurion and Digi is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Centurion Acquisition Corp and Digi International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digi International and Centurion Acquisition 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 Centurion Acquisition Corp 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 Centurion Acquisition i.e., Centurion Acquisition and Digi International go up and down completely randomly.

Pair Corralation between Centurion Acquisition and Digi International

Assuming the 90 days horizon Centurion Acquisition Corp is expected to generate 2.4 times more return on investment than Digi International. However, Centurion Acquisition is 2.4 times more volatile than Digi International. It trades about 0.04 of its potential returns per unit of risk. Digi International is currently generating about 0.0 per unit of risk. If you would invest  14.00  in Centurion Acquisition Corp on December 20, 2024 and sell it today you would earn a total of  0.00  from holding Centurion Acquisition Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	86.44%
Values	Daily Returns

Centurion Acquisition Corp  vs.  Digi International

Centurion Acquisition

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Centurion Acquisition Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Centurion Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Digi International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Digi International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Digi International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Centurion Acquisition and Digi International

The main advantage of trading using opposite Centurion Acquisition and Digi International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centurion Acquisition 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 Centurion Acquisition Corp 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.