Correlation Between Summit Materials and DigiAsia Corp

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Can any of the company-specific risk be diversified away by investing in both Summit Materials and DigiAsia Corp 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 Summit Materials and DigiAsia Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and DigiAsia Corp, you can compare the effects of market volatilities on Summit Materials and DigiAsia Corp 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 Summit Materials with a short position of DigiAsia Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and DigiAsia Corp.

Diversification Opportunities for Summit Materials and DigiAsia Corp

0.0
  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between Summit Materials and DigiAsia Corp

Considering the 90-day investment horizon Summit Materials is expected to generate 25.56 times less return on investment than DigiAsia Corp. But when comparing it to its historical volatility, Summit Materials is 11.0 times less risky than DigiAsia Corp. It trades about 0.05 of its potential returns per unit of risk. DigiAsia Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  5.20  in DigiAsia Corp on October 4, 2024 and sell it today you would earn a total of  7.80  from holding DigiAsia Corp or generate 150.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy45.84%
ValuesDaily Returns

Summit Materials  vs.  DigiAsia Corp

 Performance 
       Timeline  
Summit Materials 

Risk-Adjusted Performance

21 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Summit Materials displayed solid returns over the last few months and may actually be approaching a breakup point.
DigiAsia Corp 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in DigiAsia Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, DigiAsia Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Summit Materials and DigiAsia Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Summit Materials and DigiAsia Corp

The main advantage of trading using opposite Summit Materials and DigiAsia Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, DigiAsia Corp 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 DigiAsia Corp will offset losses from the drop in DigiAsia Corp's long position.
The idea behind Summit Materials and DigiAsia Corp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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