Correlation Between DigitalOcean Holdings and Astronics

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

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

Diversification Opportunities for DigitalOcean Holdings and Astronics

0.71

Correlation Coefficient

DigitalOcean Holdings  Astronics

Poor diversification

The 3 months correlation between DigitalOcean and Astronics is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding DigitalOcean Holdings and Astronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astronics and DigitalOcean 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 DigitalOcean Holdings are associated (or correlated) with Astronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astronics has no effect on the direction of DigitalOcean Holdings i.e., DigitalOcean Holdings and Astronics go up and down completely randomly.

Pair Corralation between DigitalOcean Holdings and Astronics

Given the investment horizon of 90 days DigitalOcean Holdings is expected to generate 0.91 times more return on investment than Astronics. However, DigitalOcean Holdings is 1.1 times less risky than Astronics. It trades about -0.02 of its potential returns per unit of risk. Astronics is currently generating about -0.06 per unit of risk. If you would invest  4,048  in DigitalOcean Holdings on September 15, 2024 and sell it today you would lose (235.00) from holding DigitalOcean Holdings or give up 5.81% of portfolio value over 90 days.

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

DigitalOcean Holdings  vs.  Astronics

DigitalOcean Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DigitalOcean Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, DigitalOcean Holdings is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Astronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with DigitalOcean Holdings and Astronics

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

The idea behind DigitalOcean Holdings and Astronics 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.