Correlation Between Digia Oyj and Bittium Oyj

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

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

Diversification Opportunities for Digia Oyj and Bittium Oyj

0.09

Correlation Coefficient

Digia Oyj  Bittium Oyj

Significant diversification

The 3 months correlation between Digia and Bittium is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Digia Oyj and Bittium Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bittium Oyj and Digia Oyj 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 Digia Oyj are associated (or correlated) with Bittium Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bittium Oyj has no effect on the direction of Digia Oyj i.e., Digia Oyj and Bittium Oyj go up and down completely randomly.

Pair Corralation between Digia Oyj and Bittium Oyj

Assuming the 90 days trading horizon Digia Oyj is expected to generate 0.94 times more return on investment than Bittium Oyj. However, Digia Oyj is 1.07 times less risky than Bittium Oyj. It trades about 0.18 of its potential returns per unit of risk. Bittium Oyj is currently generating about 0.0 per unit of risk. If you would invest  550.00  in Digia Oyj on October 10, 2024 and sell it today you would earn a total of  134.00  from holding Digia Oyj or generate 24.36% return on investment over 90 days.

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

Digia Oyj  vs.  Bittium Oyj

Digia Oyj

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Digia Oyj are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Digia Oyj demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Bittium Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Digia Oyj and Bittium Oyj

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

The idea behind Digia Oyj and Bittium Oyj 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.