Correlation Between Digi International and Mobilicom Limited

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

By analyzing existing cross correlation between Digi International and Mobilicom Limited Warrants, you can compare the effects of market volatilities on Digi International and Mobilicom Limited 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 Mobilicom Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digi International and Mobilicom Limited.

Diversification Opportunities for Digi International and Mobilicom Limited

0.38

Correlation Coefficient

Digi International  Mobilicom Limited

Weak diversification

The 3 months correlation between Digi and Mobilicom is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Digi International and Mobilicom Limited Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobilicom 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 Mobilicom Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobilicom Limited has no effect on the direction of Digi International i.e., Digi International and Mobilicom Limited go up and down completely randomly.

Pair Corralation between Digi International and Mobilicom Limited

Given the investment horizon of 90 days Digi International is expected to generate 119.92 times less return on investment than Mobilicom Limited. But when comparing it to its historical volatility, Digi International is 84.09 times less risky than Mobilicom Limited. It trades about 0.13 of its potential returns per unit of risk. Mobilicom Limited Warrants is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Mobilicom Limited Warrants on September 3, 2024 and sell it today you would earn a total of  14.00  from holding Mobilicom Limited Warrants or generate 127.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	50.0%
Values	Daily Returns

Digi International  vs.  Mobilicom Limited Warrants

Digi International

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Digi International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating forward indicators, Digi International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Mobilicom Limited

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mobilicom Limited Warrants are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental drivers, Mobilicom Limited showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Digi International and Mobilicom Limited

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

The idea behind Digi International and Mobilicom Limited Warrants 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.