Correlation Between Space-Communication and Digi International

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

By analyzing existing cross correlation between Space Communication and Digi International, you can compare the effects of market volatilities on Space-Communication and Digi International 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 Space-Communication with a short position of Digi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Space-Communication and Digi International.

Diversification Opportunities for Space-Communication and Digi International

0.0

Correlation Coefficient

Space-Communication  Digi International

Pay attention - limited upside

The 3 months correlation between Space-Communication and Digi is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Space Communication and Digi International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digi International and Space-Communication 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 Space Communication are associated (or correlated) with Digi International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digi International has no effect on the direction of Space-Communication i.e., Space-Communication and Digi International go up and down completely randomly.

Pair Corralation between Space-Communication and Digi International

Assuming the 90 days horizon Space Communication is expected to under-perform the Digi International. In addition to that, Space-Communication is 1.49 times more volatile than Digi International. It trades about -0.04 of its total potential returns per unit of risk. Digi International is currently generating about 0.0 per unit of volatility. If you would invest  3,584  in Digi International on October 27, 2024 and sell it today you would lose (382.00) from holding Digi International or give up 10.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.2%
Values	Daily Returns

Space Communication  vs.  Digi International

Space Communication

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Space Communication has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Space-Communication is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Digi International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Digi International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting forward indicators, Digi International may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Space-Communication and Digi International

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

The idea behind Space Communication and Digi International 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.