Correlation Between Digihost Technology and Forge Global

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

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

Diversification Opportunities for Digihost Technology and Forge Global

-0.73

Correlation Coefficient

Digihost Technology  Forge Global

Pay attention - limited upside

The 3 months correlation between Digihost and Forge is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Digihost Technology and Forge Global Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forge Global Holdings and Digihost Technology 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 Digihost Technology are associated (or correlated) with Forge Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forge Global Holdings has no effect on the direction of Digihost Technology i.e., Digihost Technology and Forge Global go up and down completely randomly.

Pair Corralation between Digihost Technology and Forge Global

Given the investment horizon of 90 days Digihost Technology is expected to generate 1.31 times more return on investment than Forge Global. However, Digihost Technology is 1.31 times more volatile than Forge Global Holdings. It trades about 0.17 of its potential returns per unit of risk. Forge Global Holdings is currently generating about -0.04 per unit of risk. If you would invest  118.00  in Digihost Technology on September 2, 2024 and sell it today you would earn a total of  94.00  from holding Digihost Technology or generate 79.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Digihost Technology  vs.  Forge Global Holdings

Digihost Technology

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Digihost Technology are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical indicators, Digihost Technology demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Forge Global Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forge Global Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Digihost Technology and Forge Global

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

The idea behind Digihost Technology and Forge Global Holdings 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.