Correlation Between DGTL Holdings and Farmhouse

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

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

Diversification Opportunities for DGTL Holdings and Farmhouse

0.4

Correlation Coefficient

DGTL Holdings  Farmhouse

Very weak diversification

The 3 months correlation between DGTL and Farmhouse is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding DGTL Holdings and Farmhouse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmhouse and DGTL Holdings 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 DGTL Holdings are associated (or correlated) with Farmhouse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmhouse has no effect on the direction of DGTL Holdings i.e., DGTL Holdings and Farmhouse go up and down completely randomly.

Pair Corralation between DGTL Holdings and Farmhouse

Assuming the 90 days horizon DGTL Holdings is expected to generate 2.32 times more return on investment than Farmhouse. However, DGTL Holdings is 2.32 times more volatile than Farmhouse. It trades about 0.15 of its potential returns per unit of risk. Farmhouse is currently generating about -0.02 per unit of risk. If you would invest  0.60  in DGTL Holdings on September 23, 2024 and sell it today you would earn a total of  0.00  from holding DGTL Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

DGTL Holdings  vs.  Farmhouse

DGTL Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DGTL Holdings 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 technical 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.

Farmhouse

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Farmhouse has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with DGTL Holdings and Farmhouse

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

The idea behind DGTL Holdings and Farmhouse 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.