Correlation Between Rush Factory and Digia Oyj

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

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

Diversification Opportunities for Rush Factory and Digia Oyj

0.77

Correlation Coefficient

Rush Factory  Digia Oyj

Poor diversification

The 3 months correlation between Rush and Digia is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Rush Factory Oyj and Digia Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digia Oyj and Rush Factory 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 Rush Factory Oyj are associated (or correlated) with Digia Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digia Oyj has no effect on the direction of Rush Factory i.e., Rush Factory and Digia Oyj go up and down completely randomly.

Pair Corralation between Rush Factory and Digia Oyj

Assuming the 90 days trading horizon Rush Factory Oyj is expected to generate 5.19 times more return on investment than Digia Oyj. However, Rush Factory is 5.19 times more volatile than Digia Oyj. It trades about 0.08 of its potential returns per unit of risk. Digia Oyj is currently generating about 0.08 per unit of risk. If you would invest  36.00  in Rush Factory Oyj on October 9, 2024 and sell it today you would earn a total of  30.00  from holding Rush Factory Oyj or generate 83.33% return on investment over 90 days.

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

Rush Factory Oyj  vs.  Digia Oyj

Rush Factory Oyj

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rush Factory Oyj are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Rush Factory exhibited solid returns over the last few months and may actually be approaching a breakup point.

Digia Oyj

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Digia Oyj are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Digia Oyj demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rush Factory and Digia Oyj

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

The idea behind Rush Factory Oyj and Digia Oyj 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..