Correlation Between Sparx Technology and DGTL Holdings

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

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

Diversification Opportunities for Sparx Technology and DGTL Holdings

-0.37

Correlation Coefficient

Sparx Technology  DGTL Holdings

Very good diversification

The 3 months correlation between Sparx and DGTL is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Sparx Technology and DGTL Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DGTL Holdings and Sparx 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 Sparx Technology 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 Sparx Technology i.e., Sparx Technology and DGTL Holdings go up and down completely randomly.

Pair Corralation between Sparx Technology and DGTL Holdings

Assuming the 90 days trading horizon Sparx Technology is expected to generate 51.72 times less return on investment than DGTL Holdings. But when comparing it to its historical volatility, Sparx Technology is 43.49 times less risky than DGTL Holdings. It trades about 0.08 of its potential returns per unit of risk. DGTL Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  7.50  in DGTL Holdings on September 27, 2024 and sell it today you would lose (3.00) from holding DGTL Holdings or give up 40.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.2%
Values	Daily Returns

Sparx Technology  vs.  DGTL Holdings

Sparx Technology

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sparx Technology are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Sparx Technology showed solid returns over the last few months and may actually be approaching a breakup point.

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. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Sparx Technology and DGTL Holdings

The main advantage of trading using opposite Sparx Technology and DGTL Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparx Technology 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 Sparx Technology 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.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.