Correlation Between Concentrix and Applied Digital

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

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

Diversification Opportunities for Concentrix and Applied Digital

-0.01

Correlation Coefficient

Concentrix  Applied Digital

Good diversification

The 3 months correlation between Concentrix and Applied is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Concentrix and Applied Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Digital and Concentrix 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 Concentrix are associated (or correlated) with Applied Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Digital has no effect on the direction of Concentrix i.e., Concentrix and Applied Digital go up and down completely randomly.

Pair Corralation between Concentrix and Applied Digital

Given the investment horizon of 90 days Concentrix is expected to under-perform the Applied Digital. But the stock apears to be less risky and, when comparing its historical volatility, Concentrix is 3.21 times less risky than Applied Digital. The stock trades about -0.08 of its potential returns per unit of risk. The Applied Digital is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  220.00  in Applied Digital on October 3, 2024 and sell it today you would earn a total of  545.00  from holding Applied Digital or generate 247.73% return on investment over 90 days.

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

Concentrix  vs.  Applied Digital

Concentrix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Concentrix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Applied Digital

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Digital are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, Applied Digital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Concentrix and Applied Digital

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

The idea behind Concentrix and Applied Digital 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.