Correlation Between Desktop Metal and Logitech International

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

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

Diversification Opportunities for Desktop Metal and Logitech International

0.46

Correlation Coefficient

Desktop Metal  Logitech International

Very weak diversification

The 3 months correlation between Desktop and Logitech is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Desktop Metal and Logitech International SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logitech International and Desktop Metal 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 Desktop Metal are associated (or correlated) with Logitech International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logitech International has no effect on the direction of Desktop Metal i.e., Desktop Metal and Logitech International go up and down completely randomly.

Pair Corralation between Desktop Metal and Logitech International

Allowing for the 90-day total investment horizon Desktop Metal is expected to generate 1.46 times more return on investment than Logitech International. However, Desktop Metal is 1.46 times more volatile than Logitech International SA. It trades about 0.0 of its potential returns per unit of risk. Logitech International SA is currently generating about -0.04 per unit of risk. If you would invest  427.00  in Desktop Metal on September 3, 2024 and sell it today you would lose (11.00) from holding Desktop Metal or give up 2.58% of portfolio value over 90 days.

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

Desktop Metal  vs.  Logitech International SA

Desktop Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Desktop Metal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Desktop Metal is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Logitech International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Logitech International SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Logitech International is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Desktop Metal and Logitech International

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

The idea behind Desktop Metal and Logitech International SA 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.