Correlation Between Digilife Technologies and Lundin Gold

Can any of the company-specific risk be diversified away by investing in both Digilife Technologies and Lundin Gold 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 Lundin Gold 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 Lundin Gold, you can compare the effects of market volatilities on Digilife Technologies and Lundin Gold 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 Lundin Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digilife Technologies and Lundin Gold.

Diversification Opportunities for Digilife Technologies and Lundin Gold

-0.06

Correlation Coefficient

Digilife Technologies  Lundin Gold

Good diversification

The 3 months correlation between Digilife and Lundin is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Digilife Technologies Limited and Lundin Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Gold 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 Lundin Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lundin Gold has no effect on the direction of Digilife Technologies i.e., Digilife Technologies and Lundin Gold go up and down completely randomly.

Pair Corralation between Digilife Technologies and Lundin Gold

Assuming the 90 days trading horizon Digilife Technologies is expected to generate 3.17 times less return on investment than Lundin Gold. In addition to that, Digilife Technologies is 1.88 times more volatile than Lundin Gold. It trades about 0.01 of its total potential returns per unit of risk. Lundin Gold is currently generating about 0.07 per unit of volatility. If you would invest  976.00  in Lundin Gold on October 11, 2024 and sell it today you would earn a total of  1,069  from holding Lundin Gold or generate 109.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Digilife Technologies Limited  vs.  Lundin Gold

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 nearly stable basic indicators, Digilife Technologies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Lundin Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lundin Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Lundin Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Digilife Technologies and Lundin Gold

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

The idea behind Digilife Technologies Limited and Lundin Gold 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.