Correlation Between HELIOS TECHS and Digilife Technologies

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

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

Diversification Opportunities for HELIOS TECHS and Digilife Technologies

-0.3

Correlation Coefficient

HELIOS TECHS  Digilife Technologies

Very good diversification

The 3 months correlation between HELIOS and Digilife is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding HELIOS TECHS INC and Digilife Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digilife Technologies and HELIOS TECHS 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 HELIOS TECHS INC are associated (or correlated) with Digilife Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digilife Technologies has no effect on the direction of HELIOS TECHS i.e., HELIOS TECHS and Digilife Technologies go up and down completely randomly.

Pair Corralation between HELIOS TECHS and Digilife Technologies

Assuming the 90 days horizon HELIOS TECHS INC is expected to under-perform the Digilife Technologies. But the stock apears to be less risky and, when comparing its historical volatility, HELIOS TECHS INC is 1.75 times less risky than Digilife Technologies. The stock trades about 0.0 of its potential returns per unit of risk. The Digilife Technologies Limited is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  91.00  in Digilife Technologies Limited on October 4, 2024 and sell it today you would lose (17.00) from holding Digilife Technologies Limited or give up 18.68% of portfolio value over 90 days.

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

HELIOS TECHS INC  vs.  Digilife Technologies Limited

HELIOS TECHS INC

Risk-Adjusted Performance

1 of 100

Weak

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

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.

Pair Trading with HELIOS TECHS and Digilife Technologies

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

The idea behind HELIOS TECHS INC and Digilife Technologies Limited 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.