Correlation Between Digimarc and DigiCom Berhad

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

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

Diversification Opportunities for Digimarc and DigiCom Berhad

0.77

Correlation Coefficient

Digimarc  DigiCom Berhad

Poor diversification

The 3 months correlation between Digimarc and DigiCom is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Digimarc and DigiCom Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DigiCom Berhad and Digimarc 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 Digimarc are associated (or correlated) with DigiCom Berhad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DigiCom Berhad has no effect on the direction of Digimarc i.e., Digimarc and DigiCom Berhad go up and down completely randomly.

Pair Corralation between Digimarc and DigiCom Berhad

Given the investment horizon of 90 days Digimarc is expected to generate 6.32 times more return on investment than DigiCom Berhad. However, Digimarc is 6.32 times more volatile than DigiCom Berhad. It trades about 0.05 of its potential returns per unit of risk. DigiCom Berhad is currently generating about 0.14 per unit of risk. If you would invest  2,027  in Digimarc on October 1, 2024 and sell it today you would earn a total of  1,773  from holding Digimarc or generate 87.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	21.89%
Values	Daily Returns

Digimarc  vs.  DigiCom Berhad

Digimarc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Digimarc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Digimarc exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Digimarc and DigiCom Berhad

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

The idea behind Digimarc and DigiCom Berhad 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.