Correlation Between ADEIA P and Digital Turbine

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

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

Diversification Opportunities for ADEIA P and Digital Turbine

0.75

Correlation Coefficient

ADEIA P  Digital Turbine

Poor diversification

The 3 months correlation between ADEIA and Digital is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding ADEIA P and Digital Turbine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Turbine and ADEIA P 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 ADEIA P are associated (or correlated) with Digital Turbine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Turbine has no effect on the direction of ADEIA P i.e., ADEIA P and Digital Turbine go up and down completely randomly.

Pair Corralation between ADEIA P and Digital Turbine

Given the investment horizon of 90 days ADEIA P is expected to generate 0.45 times more return on investment than Digital Turbine. However, ADEIA P is 2.2 times less risky than Digital Turbine. It trades about -0.08 of its potential returns per unit of risk. Digital Turbine is currently generating about -0.31 per unit of risk. If you would invest  1,057  in ADEIA P on January 26, 2024 and sell it today you would lose (31.00) from holding ADEIA P or give up 2.93% of portfolio value over 90 days.

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

ADEIA P  vs.  Digital Turbine

ADEIA P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ADEIA P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Digital Turbine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Digital Turbine has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with ADEIA P and Digital Turbine

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

The idea behind ADEIA P and Digital Turbine 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.