Correlation Between DigiMax Global and Cathedra Bitcoin

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

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

Diversification Opportunities for DigiMax Global and Cathedra Bitcoin

0.07

Correlation Coefficient

DigiMax Global  Cathedra Bitcoin

Significant diversification

The 3 months correlation between DigiMax and Cathedra is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding DigiMax Global and Cathedra Bitcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathedra Bitcoin and DigiMax Global 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 DigiMax Global are associated (or correlated) with Cathedra Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathedra Bitcoin has no effect on the direction of DigiMax Global i.e., DigiMax Global and Cathedra Bitcoin go up and down completely randomly.

Pair Corralation between DigiMax Global and Cathedra Bitcoin

Assuming the 90 days horizon DigiMax Global is expected to under-perform the Cathedra Bitcoin. In addition to that, DigiMax Global is 2.54 times more volatile than Cathedra Bitcoin. It trades about -0.04 of its total potential returns per unit of risk. Cathedra Bitcoin is currently generating about 0.02 per unit of volatility. If you would invest  6.00  in Cathedra Bitcoin on September 4, 2024 and sell it today you would lose (0.28) from holding Cathedra Bitcoin or give up 4.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

DigiMax Global  vs.  Cathedra Bitcoin

DigiMax Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DigiMax Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Cathedra Bitcoin

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cathedra Bitcoin are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cathedra Bitcoin may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with DigiMax Global and Cathedra Bitcoin

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

The idea behind DigiMax Global and Cathedra Bitcoin 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.