Correlation Between DigiAsia Corp and SentinelOne

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

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

Diversification Opportunities for DigiAsia Corp and SentinelOne

0.33

Correlation Coefficient

DigiAsia Corp  SentinelOne

Weak diversification

The 3 months correlation between DigiAsia and SentinelOne is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding DigiAsia Corp and SentinelOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SentinelOne and DigiAsia Corp 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 DigiAsia Corp are associated (or correlated) with SentinelOne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SentinelOne has no effect on the direction of DigiAsia Corp i.e., DigiAsia Corp and SentinelOne go up and down completely randomly.

Pair Corralation between DigiAsia Corp and SentinelOne

Assuming the 90 days horizon DigiAsia Corp is expected to generate 5.95 times more return on investment than SentinelOne. However, DigiAsia Corp is 5.95 times more volatile than SentinelOne. It trades about 0.05 of its potential returns per unit of risk. SentinelOne is currently generating about -0.2 per unit of risk. If you would invest  8.93  in DigiAsia Corp on September 21, 2024 and sell it today you would lose (1.92) from holding DigiAsia Corp or give up 21.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	81.82%
Values	Daily Returns

DigiAsia Corp  vs.  SentinelOne

DigiAsia Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DigiAsia Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, DigiAsia Corp showed solid returns over the last few months and may actually be approaching a breakup point.

SentinelOne

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SentinelOne has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SentinelOne is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with DigiAsia Corp and SentinelOne

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

The idea behind DigiAsia Corp and SentinelOne 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.