Correlation Between Cuentas and Digital Brands

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

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

Diversification Opportunities for Cuentas and Digital Brands

-0.12

Correlation Coefficient

Cuentas  Digital Brands

Good diversification

The 3 months correlation between Cuentas and Digital is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Cuentas and Digital Brands Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Brands Group and Cuentas 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 Cuentas are associated (or correlated) with Digital Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Brands Group has no effect on the direction of Cuentas i.e., Cuentas and Digital Brands go up and down completely randomly.

Pair Corralation between Cuentas and Digital Brands

If you would invest  1,160  in Digital Brands Group on September 3, 2024 and sell it today you would earn a total of  500.00  from holding Digital Brands Group or generate 43.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.69%
Values	Daily Returns

Cuentas  vs.  Digital Brands Group

Cuentas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cuentas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Cuentas is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Digital Brands Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Digital Brands Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward indicators, Digital Brands showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cuentas and Digital Brands

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

The idea behind Cuentas and Digital Brands Group 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.