Correlation Between SAIHEAT and Applied Digital

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

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

Diversification Opportunities for SAIHEAT and Applied Digital

0.63

Correlation Coefficient

SAIHEAT  Applied Digital

Poor diversification

The 3 months correlation between SAIHEAT and Applied is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding SAIHEAT Limited and Applied Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Digital and SAIHEAT 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 SAIHEAT Limited are associated (or correlated) with Applied Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Digital has no effect on the direction of SAIHEAT i.e., SAIHEAT and Applied Digital go up and down completely randomly.

Pair Corralation between SAIHEAT and Applied Digital

Assuming the 90 days horizon SAIHEAT Limited is expected to generate 1.19 times more return on investment than Applied Digital. However, SAIHEAT is 1.19 times more volatile than Applied Digital. It trades about 0.08 of its potential returns per unit of risk. Applied Digital is currently generating about -0.17 per unit of risk. If you would invest  9.50  in SAIHEAT Limited on October 6, 2024 and sell it today you would earn a total of  0.32  from holding SAIHEAT Limited or generate 3.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	45.0%
Values	Daily Returns

SAIHEAT Limited  vs.  Applied Digital

SAIHEAT Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SAIHEAT Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical indicators, SAIHEAT showed solid returns over the last few months and may actually be approaching a breakup point.

Applied Digital

Risk-Adjusted Performance

7 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Digital are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, Applied Digital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SAIHEAT and Applied Digital

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

The idea behind SAIHEAT Limited and Applied Digital 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.