Correlation Between Smart Digital and Indigo Acquisition

Can any of the company-specific risk be diversified away by investing in both Smart Digital and Indigo Acquisition 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 Smart Digital and Indigo Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Smart Digital Group and Indigo Acquisition Corp, you can compare the effects of market volatilities on Smart Digital and Indigo Acquisition 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 Smart Digital with a short position of Indigo Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smart Digital and Indigo Acquisition.

Diversification Opportunities for Smart Digital and Indigo Acquisition

-0.44

Correlation Coefficient

Smart Digital  Indigo Acquisition

Very good diversification

The 3 months correlation between Smart and Indigo is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Smart Digital Group and Indigo Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indigo Acquisition Corp and Smart Digital 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 Smart Digital Group are associated (or correlated) with Indigo Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indigo Acquisition Corp has no effect on the direction of Smart Digital i.e., Smart Digital and Indigo Acquisition go up and down completely randomly.

Pair Corralation between Smart Digital and Indigo Acquisition

Considering the 90-day investment horizon Smart Digital Group is expected to generate 243.52 times more return on investment than Indigo Acquisition. However, Smart Digital is 243.52 times more volatile than Indigo Acquisition Corp. It trades about 0.24 of its potential returns per unit of risk. Indigo Acquisition Corp is currently generating about 0.46 per unit of risk. If you would invest  400.00  in Smart Digital Group on April 30, 2025 and sell it today you would earn a total of  1,665  from holding Smart Digital Group or generate 416.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	32.79%
Values	Daily Returns

Smart Digital Group  vs.  Indigo Acquisition Corp

Smart Digital Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Smart Digital Group are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal fundamental indicators, Smart Digital displayed solid returns over the last few months and may actually be approaching a breakup point.

Indigo Acquisition Corp

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Indigo Acquisition Corp are ranked lower than 35 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Indigo Acquisition is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Smart Digital and Indigo Acquisition

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

The idea behind Smart Digital Group and Indigo Acquisition Corp 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.