Correlation Between Amer Sports, and DigiCom Berhad

Can any of the company-specific risk be diversified away by investing in both Amer Sports, and DigiCom Berhad 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 Amer Sports, and DigiCom Berhad into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Amer Sports, and DigiCom Berhad

0.88

Correlation Coefficient

Amer Sports,  DigiCom Berhad

Very poor diversification

The 3 months correlation between Amer and DigiCom is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Amer Sports, and DigiCom Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DigiCom Berhad and Amer Sports, 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 Amer Sports, are associated (or correlated) with DigiCom Berhad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DigiCom Berhad has no effect on the direction of Amer Sports, i.e., Amer Sports, and DigiCom Berhad go up and down completely randomly.

Pair Corralation between Amer Sports, and DigiCom Berhad

If you would invest  2,369  in Amer Sports, on September 22, 2024 and sell it today you would earn a total of  449.00  from holding Amer Sports, or generate 18.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	4.76%
Values	Daily Returns

Amer Sports,  vs.  DigiCom Berhad

Amer Sports,

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amer Sports, are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Amer Sports, unveiled solid returns over the last few months and may actually be approaching a breakup point.

DigiCom Berhad

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DigiCom Berhad has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, DigiCom Berhad is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Amer Sports, and DigiCom Berhad

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

The idea behind Amer Sports, and DigiCom Berhad 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.