Correlation Between Digi International and China Foods
Can any of the company-specific risk be diversified away by investing in both Digi International and China Foods 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 Digi International and China Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digi International and China Foods Limited, you can compare the effects of market volatilities on Digi International and China Foods 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 Digi International with a short position of China Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digi International and China Foods.
Diversification Opportunities for Digi International and China Foods
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Digi and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Digi International and China Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Foods Limited and Digi International 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 Digi International are associated (or correlated) with China Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Foods Limited has no effect on the direction of Digi International i.e., Digi International and China Foods go up and down completely randomly.
Pair Corralation between Digi International and China Foods
If you would invest 2,713 in Digi International on September 6, 2024 and sell it today you would earn a total of 582.00 from holding Digi International or generate 21.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Digi International vs. China Foods Limited
Performance |
Timeline |
Digi International |
China Foods Limited |
Digi International and China Foods Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Digi International and China Foods
The main advantage of trading using opposite Digi International and China Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digi International position performs unexpectedly, China Foods 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 China Foods will offset losses from the drop in China Foods' long position.Digi International vs. Cambium Networks Corp | Digi International vs. Knowles Cor | Digi International vs. Ituran Location and | Digi International vs. ADTRAN Inc |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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