Correlation Between Digi International and Wireless Telecom

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

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

Diversification Opportunities for Digi International and Wireless Telecom

0.0

Correlation Coefficient

Digi International  Wireless Telecom

Pay attention - limited upside

The 3 months correlation between Digi and Wireless is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Digi International and Wireless Telecom Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wireless Telecom 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 Wireless Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wireless Telecom has no effect on the direction of Digi International i.e., Digi International and Wireless Telecom go up and down completely randomly.

Pair Corralation between Digi International and Wireless Telecom

If you would invest (100.00) in Wireless Telecom Group on December 28, 2024 and sell it today you would earn a total of  100.00  from holding Wireless Telecom Group or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Digi International  vs.  Wireless Telecom Group

Digi International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Digi International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Digi International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Wireless Telecom

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wireless Telecom Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Wireless Telecom is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Digi International and Wireless Telecom

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

The idea behind Digi International and Wireless Telecom Group 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 Stocks Directory module to find actively traded stocks across global markets.