Correlation Between Digilife Technologies and Benchmark Electronics

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

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

Diversification Opportunities for Digilife Technologies and Benchmark Electronics

-0.45

Correlation Coefficient

Digilife Technologies  Benchmark Electronics

Very good diversification

The 3 months correlation between Digilife and Benchmark is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Digilife Technologies Limited and Benchmark Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benchmark Electronics and Digilife Technologies 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 Digilife Technologies Limited are associated (or correlated) with Benchmark Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benchmark Electronics has no effect on the direction of Digilife Technologies i.e., Digilife Technologies and Benchmark Electronics go up and down completely randomly.

Pair Corralation between Digilife Technologies and Benchmark Electronics

Assuming the 90 days trading horizon Digilife Technologies Limited is expected to under-perform the Benchmark Electronics. In addition to that, Digilife Technologies is 1.52 times more volatile than Benchmark Electronics. It trades about -0.06 of its total potential returns per unit of risk. Benchmark Electronics is currently generating about 0.13 per unit of volatility. If you would invest  3,945  in Benchmark Electronics on October 24, 2024 and sell it today you would earn a total of  735.00  from holding Benchmark Electronics or generate 18.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Digilife Technologies Limited  vs.  Benchmark Electronics

Digilife Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Digilife Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Benchmark Electronics

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Benchmark Electronics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Benchmark Electronics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Digilife Technologies and Benchmark Electronics

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

The idea behind Digilife Technologies Limited and Benchmark Electronics 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.