Correlation Between Desktop Metal and SatixFy Communications

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

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

Diversification Opportunities for Desktop Metal and SatixFy Communications

-0.47

Correlation Coefficient

Desktop Metal  SatixFy Communications

Very good diversification

The 3 months correlation between Desktop and SatixFy is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Desktop Metal and SatixFy Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SatixFy Communications and Desktop Metal 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 Desktop Metal are associated (or correlated) with SatixFy Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SatixFy Communications has no effect on the direction of Desktop Metal i.e., Desktop Metal and SatixFy Communications go up and down completely randomly.

Pair Corralation between Desktop Metal and SatixFy Communications

Allowing for the 90-day total investment horizon Desktop Metal is expected to under-perform the SatixFy Communications. But the stock apears to be less risky and, when comparing its historical volatility, Desktop Metal is 1.58 times less risky than SatixFy Communications. The stock trades about 0.0 of its potential returns per unit of risk. The SatixFy Communications is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  71.00  in SatixFy Communications on September 4, 2024 and sell it today you would earn a total of  17.00  from holding SatixFy Communications or generate 23.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Desktop Metal  vs.  SatixFy Communications

Desktop Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Desktop Metal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Desktop Metal is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

SatixFy Communications

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SatixFy Communications are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, SatixFy Communications showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Desktop Metal and SatixFy Communications

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

The idea behind Desktop Metal and SatixFy Communications 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.