Correlation Between Applied Digital and Greenhill

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

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

Diversification Opportunities for Applied Digital and Greenhill

0.27

Correlation Coefficient

Applied Digital  Greenhill

Modest diversification

The 3 months correlation between Applied and Greenhill is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Applied Digital and Greenhill Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenhill and Applied Digital 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 Applied Digital are associated (or correlated) with Greenhill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenhill has no effect on the direction of Applied Digital i.e., Applied Digital and Greenhill go up and down completely randomly.

Pair Corralation between Applied Digital and Greenhill

Given the investment horizon of 90 days Applied Digital is expected to generate 0.78 times more return on investment than Greenhill. However, Applied Digital is 1.28 times less risky than Greenhill. It trades about 0.07 of its potential returns per unit of risk. Greenhill Co is currently generating about 0.04 per unit of risk. If you would invest  214.00  in Applied Digital on October 4, 2024 and sell it today you would earn a total of  565.00  from holding Applied Digital or generate 264.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	26.61%
Values	Daily Returns

Applied Digital  vs.  Greenhill Co

Applied Digital

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Digital are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, Applied Digital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Greenhill

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greenhill Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical indicators, Greenhill is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Applied Digital and Greenhill

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

The idea behind Applied Digital and Greenhill Co 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.