Correlation Between Telephone and Applied Digital

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

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

Diversification Opportunities for Telephone and Applied Digital

-0.23

Correlation Coefficient

Telephone  Applied Digital

Very good diversification

The 3 months correlation between Telephone and Applied is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Telephone and Data and Applied Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Digital and Telephone 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 Telephone and Data 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 Telephone i.e., Telephone and Applied Digital go up and down completely randomly.

Pair Corralation between Telephone and Applied Digital

Assuming the 90 days trading horizon Telephone and Data is expected to under-perform the Applied Digital. But the preferred stock apears to be less risky and, when comparing its historical volatility, Telephone and Data is 6.11 times less risky than Applied Digital. The preferred stock trades about -0.16 of its potential returns per unit of risk. The Applied Digital is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  648.00  in Applied Digital on November 28, 2024 and sell it today you would earn a total of  147.00  from holding Applied Digital or generate 22.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Telephone and Data  vs.  Applied Digital

Telephone and Data

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Telephone and Data are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Telephone is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Applied Digital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Applied Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Telephone and Applied Digital

The main advantage of trading using opposite Telephone and Applied Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telephone 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 Telephone and Data 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.