Correlation Between Digi International and EPlus

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Can any of the company-specific risk be diversified away by investing in both Digi International and EPlus 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 Digi International and EPlus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digi International and ePlus inc, you can compare the effects of market volatilities on Digi International and EPlus 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 Digi International with a short position of EPlus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digi International and EPlus.

Diversification Opportunities for Digi International and EPlus

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between Digi and EPlus is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Digi International and ePlus inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ePlus inc and Digi International 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 Digi International are associated (or correlated) with EPlus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ePlus inc has no effect on the direction of Digi International i.e., Digi International and EPlus go up and down completely randomly.

Pair Corralation between Digi International and EPlus

Given the investment horizon of 90 days Digi International is expected to generate 1.43 times more return on investment than EPlus. However, Digi International is 1.43 times more volatile than ePlus inc. It trades about 0.12 of its potential returns per unit of risk. ePlus inc is currently generating about 0.06 per unit of risk. If you would invest  2,841  in Digi International on May 2, 2025 and sell it today you would earn a total of  482.00  from holding Digi International or generate 16.97% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Digi International  vs.  ePlus inc

 Performance 
       Timeline  
Digi International 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Digi International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward indicators, Digi International demonstrated solid returns over the last few months and may actually be approaching a breakup point.
ePlus inc 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in ePlus inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, EPlus is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Digi International and EPlus Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Digi International and EPlus

The main advantage of trading using opposite Digi International and EPlus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digi International position performs unexpectedly, EPlus 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 EPlus will offset losses from the drop in EPlus' long position.
The idea behind Digi International and ePlus inc 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.
Check out your portfolio center.
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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