Correlation Between DigiCom Berhad and Teradyne

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

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

Diversification Opportunities for DigiCom Berhad and Teradyne

0.34

Correlation Coefficient

DigiCom Berhad  Teradyne

Weak diversification

The 3 months correlation between DigiCom and Teradyne is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding DigiCom Berhad and Teradyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradyne and DigiCom Berhad 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 DigiCom Berhad are associated (or correlated) with Teradyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradyne has no effect on the direction of DigiCom Berhad i.e., DigiCom Berhad and Teradyne go up and down completely randomly.

Pair Corralation between DigiCom Berhad and Teradyne

If you would invest  11,320  in Teradyne on October 3, 2024 and sell it today you would earn a total of  1,272  from holding Teradyne or generate 11.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

DigiCom Berhad  vs.  Teradyne

DigiCom Berhad

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DigiCom Berhad has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, DigiCom Berhad is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Teradyne

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teradyne has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Teradyne is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with DigiCom Berhad and Teradyne

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

The idea behind DigiCom Berhad and Teradyne 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.