Correlation Between Digilife Technologies and WATER WAYS

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

Diversification Opportunities for Digilife Technologies and WATER WAYS

-0.13

Correlation Coefficient

Digilife Technologies  WATER WAYS

Good diversification

The 3 months correlation between Digilife and WATER is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Digilife Technologies Limited and WATER WAYS TECHS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WATER WAYS TECHS 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 WATER WAYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WATER WAYS TECHS has no effect on the direction of Digilife Technologies i.e., Digilife Technologies and WATER WAYS go up and down completely randomly.

Pair Corralation between Digilife Technologies and WATER WAYS

Assuming the 90 days trading horizon Digilife Technologies is expected to generate 2552.34 times less return on investment than WATER WAYS. But when comparing it to its historical volatility, Digilife Technologies Limited is 36.33 times less risky than WATER WAYS. It trades about 0.0 of its potential returns per unit of risk. WATER WAYS TECHS is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  0.40  in WATER WAYS TECHS on September 22, 2024 and sell it today you would lose (0.05) from holding WATER WAYS TECHS or give up 12.5% of portfolio value over 90 days.

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

Digilife Technologies Limited  vs.  WATER WAYS TECHS

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

WATER WAYS TECHS

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WATER WAYS TECHS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, WATER WAYS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Digilife Technologies and WATER WAYS

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

The idea behind Digilife Technologies Limited and WATER WAYS TECHS 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .