Correlation Between DigitalBridge and New Concept

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

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

Diversification Opportunities for DigitalBridge and New Concept

0.09

Correlation Coefficient

DigitalBridge  New Concept

Significant diversification

The 3 months correlation between DigitalBridge and New is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding DigitalBridge Group and New Concept Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Concept Energy and DigitalBridge 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 DigitalBridge Group are associated (or correlated) with New Concept. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Concept Energy has no effect on the direction of DigitalBridge i.e., DigitalBridge and New Concept go up and down completely randomly.

Pair Corralation between DigitalBridge and New Concept

Assuming the 90 days trading horizon DigitalBridge Group is expected to generate 0.16 times more return on investment than New Concept. However, DigitalBridge Group is 6.31 times less risky than New Concept. It trades about -0.08 of its potential returns per unit of risk. New Concept Energy is currently generating about -0.12 per unit of risk. If you would invest  2,438  in DigitalBridge Group on December 31, 2024 and sell it today you would lose (64.00) from holding DigitalBridge Group or give up 2.63% of portfolio value over 90 days.

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

DigitalBridge Group  vs.  New Concept Energy

DigitalBridge Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days DigitalBridge Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady forward-looking indicators, DigitalBridge is not utilizing all of its potentials. The recent stock price chaos, may contribute to medium-term losses for the stakeholders.

New Concept Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days New Concept Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in May 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with DigitalBridge and New Concept

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

The idea behind DigitalBridge Group and New Concept Energy 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..