Correlation Between Catcher Technology and Digital China

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

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

Diversification Opportunities for Catcher Technology and Digital China

-0.9

Correlation Coefficient

Catcher Technology  Digital China

Pay attention - limited upside

The 3 months correlation between Catcher and Digital is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Catcher Technology Co and Digital China Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital China Holdings and Catcher 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 Catcher Technology Co are associated (or correlated) with Digital China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital China Holdings has no effect on the direction of Catcher Technology i.e., Catcher Technology and Digital China go up and down completely randomly.

Pair Corralation between Catcher Technology and Digital China

Assuming the 90 days trading horizon Catcher Technology Co is expected to generate 0.82 times more return on investment than Digital China. However, Catcher Technology Co is 1.22 times less risky than Digital China. It trades about 0.51 of its potential returns per unit of risk. Digital China Holdings is currently generating about -0.47 per unit of risk. If you would invest  18,050  in Catcher Technology Co on October 20, 2024 and sell it today you would earn a total of  1,900  from holding Catcher Technology Co or generate 10.53% return on investment over 90 days.

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

Catcher Technology Co  vs.  Digital China Holdings

Catcher Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catcher Technology Co 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 basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Digital China Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Digital China Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Digital China may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Catcher Technology and Digital China

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

The idea behind Catcher Technology Co and Digital China 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.