Correlation Between Digilife Technologies and ASPEN PHARUNADR

Can any of the company-specific risk be diversified away by investing in both Digilife Technologies and ASPEN PHARUNADR 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 ASPEN PHARUNADR 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 ASPEN PHARUNADR 1, you can compare the effects of market volatilities on Digilife Technologies and ASPEN PHARUNADR 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 ASPEN PHARUNADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digilife Technologies and ASPEN PHARUNADR.

Diversification Opportunities for Digilife Technologies and ASPEN PHARUNADR

0.38

Correlation Coefficient

Digilife Technologies  ASPEN PHARUNADR

Weak diversification

The 3 months correlation between Digilife and ASPEN is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Digilife Technologies Limited and ASPEN PHARUNADR 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASPEN PHARUNADR 1 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 ASPEN PHARUNADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASPEN PHARUNADR 1 has no effect on the direction of Digilife Technologies i.e., Digilife Technologies and ASPEN PHARUNADR go up and down completely randomly.

Pair Corralation between Digilife Technologies and ASPEN PHARUNADR

Assuming the 90 days trading horizon Digilife Technologies Limited is expected to generate 0.81 times more return on investment than ASPEN PHARUNADR. However, Digilife Technologies Limited is 1.24 times less risky than ASPEN PHARUNADR. It trades about 0.2 of its potential returns per unit of risk. ASPEN PHARUNADR 1 is currently generating about -0.04 per unit of risk. If you would invest  74.00  in Digilife Technologies Limited on October 8, 2024 and sell it today you would earn a total of  4.00  from holding Digilife Technologies Limited or generate 5.41% return on investment over 90 days.

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

Digilife Technologies Limited  vs.  ASPEN PHARUNADR 1

Digilife Technologies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Digilife Technologies Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Digilife Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ASPEN PHARUNADR 1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASPEN PHARUNADR 1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Digilife Technologies and ASPEN PHARUNADR

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

The idea behind Digilife Technologies Limited and ASPEN PHARUNADR 1 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 Transaction History module to view history of all your transactions and understand their impact on performance.