Correlation Between Zegona Communications and DG Innovate

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

By analyzing existing cross correlation between Zegona Communications Plc and DG Innovate PLC, you can compare the effects of market volatilities on Zegona Communications and DG Innovate 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 Zegona Communications with a short position of DG Innovate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zegona Communications and DG Innovate.

Diversification Opportunities for Zegona Communications and DG Innovate

0.0

Correlation Coefficient

Zegona Communications  DG Innovate

Pay attention - limited upside

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

Pair Corralation between Zegona Communications and DG Innovate

If you would invest  33,000  in Zegona Communications Plc on October 24, 2024 and sell it today you would earn a total of  7,600  from holding Zegona Communications Plc or generate 23.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.61%
Values	Daily Returns

Zegona Communications Plc  vs.  DG Innovate PLC

Zegona Communications Plc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zegona Communications Plc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Zegona Communications exhibited solid returns over the last few months and may actually be approaching a breakup point.

DG Innovate PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DG Innovate PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Zegona Communications and DG Innovate

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

The idea behind Zegona Communications Plc and DG Innovate PLC 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.