Correlation Between Digihost Technology and SATO Technologies

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

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

Diversification Opportunities for Digihost Technology and SATO Technologies

0.62

Correlation Coefficient

Digihost Technology  SATO Technologies

Poor diversification

The 3 months correlation between Digihost and SATO is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Digihost Technology and SATO Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SATO Technologies Corp and Digihost Technology 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 Digihost Technology are associated (or correlated) with SATO Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SATO Technologies Corp has no effect on the direction of Digihost Technology i.e., Digihost Technology and SATO Technologies go up and down completely randomly.

Pair Corralation between Digihost Technology and SATO Technologies

Assuming the 90 days trading horizon Digihost Technology is expected to generate 2.01 times more return on investment than SATO Technologies. However, Digihost Technology is 2.01 times more volatile than SATO Technologies Corp. It trades about -0.04 of its potential returns per unit of risk. SATO Technologies Corp is currently generating about -0.08 per unit of risk. If you would invest  236.00  in Digihost Technology on December 30, 2024 and sell it today you would lose (83.00) from holding Digihost Technology or give up 35.17% of portfolio value over 90 days.

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

Digihost Technology  vs.  SATO Technologies Corp

Digihost Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Digihost Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

SATO Technologies Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days SATO Technologies Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Digihost Technology and SATO Technologies

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

The idea behind Digihost Technology and SATO Technologies Corp 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.