Correlation Between ThedirectoryCom and DGTL Holdings

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

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

Diversification Opportunities for ThedirectoryCom and DGTL Holdings

0.6

Correlation Coefficient

ThedirectoryCom  DGTL Holdings

Poor diversification

The 3 months correlation between ThedirectoryCom and DGTL is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding ThedirectoryCom and DGTL Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DGTL Holdings and ThedirectoryCom 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 ThedirectoryCom are associated (or correlated) with DGTL Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DGTL Holdings has no effect on the direction of ThedirectoryCom i.e., ThedirectoryCom and DGTL Holdings go up and down completely randomly.

Pair Corralation between ThedirectoryCom and DGTL Holdings

Given the investment horizon of 90 days ThedirectoryCom is expected to under-perform the DGTL Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, ThedirectoryCom is 3.49 times less risky than DGTL Holdings. The pink sheet trades about -0.13 of its potential returns per unit of risk. The DGTL Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4.30  in DGTL Holdings on September 17, 2024 and sell it today you would lose (3.70) from holding DGTL Holdings or give up 86.05% of portfolio value over 90 days.

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

ThedirectoryCom  vs.  DGTL Holdings

ThedirectoryCom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ThedirectoryCom 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 and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

DGTL Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DGTL Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, DGTL Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ThedirectoryCom and DGTL Holdings

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

The idea behind ThedirectoryCom and DGTL 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.