Correlation Between J Long and Digi International

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

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

Diversification Opportunities for J Long and Digi International

-0.4

Correlation Coefficient

J Long  Digi International

Very good diversification

The 3 months correlation between J Long and Digi is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding J Long Group Limited and Digi International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digi International and J Long 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 J Long Group Limited 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 J Long i.e., J Long and Digi International go up and down completely randomly.

Pair Corralation between J Long and Digi International

Allowing for the 90-day total investment horizon J Long Group Limited is expected to generate 5.9 times more return on investment than Digi International. However, J Long is 5.9 times more volatile than Digi International. It trades about 0.02 of its potential returns per unit of risk. Digi International is currently generating about 0.04 per unit of risk. If you would invest  425.00  in J Long Group Limited on September 25, 2024 and sell it today you would lose (83.00) from holding J Long Group Limited or give up 19.53% of portfolio value over 90 days.

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

J Long Group Limited  vs.  Digi International

J Long Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in J Long Group Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent essential indicators, J Long disclosed solid returns over the last few months and may actually be approaching a breakup point.

Digi International

Risk-Adjusted Performance

8 of 100

OK

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 weak forward indicators, Digi International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with J Long and Digi International

The main advantage of trading using opposite J Long and Digi International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J Long 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 J Long Group Limited 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..