Correlation Between Digilife Technologies and Lion Biotechnologies

Can any of the company-specific risk be diversified away by investing in both Digilife Technologies and Lion Biotechnologies 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 Digilife Technologies and Lion Biotechnologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Digilife Technologies Limited and Lion Biotechnologies, you can compare the effects of market volatilities on Digilife Technologies and Lion Biotechnologies 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 Digilife Technologies with a short position of Lion Biotechnologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digilife Technologies and Lion Biotechnologies.

Diversification Opportunities for Digilife Technologies and Lion Biotechnologies

0.08

Correlation Coefficient

Digilife Technologies  Lion Biotechnologies

Significant diversification

The 3 months correlation between Digilife and Lion is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Digilife Technologies Limited and Lion Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Biotechnologies and Digilife Technologies 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 Digilife Technologies Limited are associated (or correlated) with Lion Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Biotechnologies has no effect on the direction of Digilife Technologies i.e., Digilife Technologies and Lion Biotechnologies go up and down completely randomly.

Pair Corralation between Digilife Technologies and Lion Biotechnologies

Assuming the 90 days trading horizon Digilife Technologies Limited is expected to under-perform the Lion Biotechnologies. But the stock apears to be less risky and, when comparing its historical volatility, Digilife Technologies Limited is 1.08 times less risky than Lion Biotechnologies. The stock trades about -0.02 of its potential returns per unit of risk. The Lion Biotechnologies is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  945.00  in Lion Biotechnologies on September 4, 2024 and sell it today you would lose (79.00) from holding Lion Biotechnologies or give up 8.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Digilife Technologies Limited  vs.  Lion Biotechnologies

Digilife Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Digilife Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Digilife Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Lion Biotechnologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lion Biotechnologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Lion Biotechnologies is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Digilife Technologies and Lion Biotechnologies

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

The idea behind Digilife Technologies Limited and Lion Biotechnologies 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.