Correlation Between CAMP4 THERAPEUTICS and Digi International

Can any of the company-specific risk be diversified away by investing in both CAMP4 THERAPEUTICS 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 CAMP4 THERAPEUTICS and Digi International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CAMP4 THERAPEUTICS PORATION and Digi International, you can compare the effects of market volatilities on CAMP4 THERAPEUTICS 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 CAMP4 THERAPEUTICS with a short position of Digi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAMP4 THERAPEUTICS and Digi International.

Diversification Opportunities for CAMP4 THERAPEUTICS and Digi International

0.37

Correlation Coefficient

CAMP4 THERAPEUTICS  Digi International

Weak diversification

The 3 months correlation between CAMP4 and Digi is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding CAMP4 THERAPEUTICS PORATION and Digi International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digi International and CAMP4 THERAPEUTICS 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 CAMP4 THERAPEUTICS PORATION 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 CAMP4 THERAPEUTICS i.e., CAMP4 THERAPEUTICS and Digi International go up and down completely randomly.

Pair Corralation between CAMP4 THERAPEUTICS and Digi International

Given the investment horizon of 90 days CAMP4 THERAPEUTICS PORATION is expected to generate 8.3 times more return on investment than Digi International. However, CAMP4 THERAPEUTICS is 8.3 times more volatile than Digi International. It trades about 0.07 of its potential returns per unit of risk. Digi International is currently generating about -0.04 per unit of risk. If you would invest  533.00  in CAMP4 THERAPEUTICS PORATION on September 21, 2024 and sell it today you would lose (13.00) from holding CAMP4 THERAPEUTICS PORATION or give up 2.44% of portfolio value over 90 days.

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

CAMP4 THERAPEUTICS PORATION  vs.  Digi International

CAMP4 THERAPEUTICS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CAMP4 THERAPEUTICS PORATION has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's primary indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Digi International

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Digi International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile forward indicators, Digi International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CAMP4 THERAPEUTICS and Digi International

The main advantage of trading using opposite CAMP4 THERAPEUTICS and Digi International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAMP4 THERAPEUTICS 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 CAMP4 THERAPEUTICS PORATION 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.

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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.