Correlation Between Digi Communications and Feper SA

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

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

Diversification Opportunities for Digi Communications and Feper SA

0.06

Correlation Coefficient

Digi Communications  Feper SA

Significant diversification

The 3 months correlation between Digi and Feper is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Digi Communications NV and Feper SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Feper SA and Digi Communications 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 Communications NV are associated (or correlated) with Feper SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Feper SA has no effect on the direction of Digi Communications i.e., Digi Communications and Feper SA go up and down completely randomly.

Pair Corralation between Digi Communications and Feper SA

Assuming the 90 days trading horizon Digi Communications NV is expected to generate 0.27 times more return on investment than Feper SA. However, Digi Communications NV is 3.76 times less risky than Feper SA. It trades about 0.09 of its potential returns per unit of risk. Feper SA is currently generating about -0.07 per unit of risk. If you would invest  6,400  in Digi Communications NV on December 29, 2024 and sell it today you would earn a total of  320.00  from holding Digi Communications NV or generate 5.0% return on investment over 90 days.

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

Digi Communications NV  vs.  Feper SA

Digi Communications

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Digi Communications NV are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Digi Communications is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Feper SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Feper SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Digi Communications and Feper SA

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

The idea behind Digi Communications NV and Feper SA 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.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.