Correlation Between DGTX and KEY

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

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

Diversification Opportunities for DGTX and KEY

0.5

Correlation Coefficient

DGTX  KEY

Very weak diversification

The 3 months correlation between DGTX and KEY is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding DGTX and KEY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEY and DGTX 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 DGTX are associated (or correlated) with KEY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEY has no effect on the direction of DGTX i.e., DGTX and KEY go up and down completely randomly.

Pair Corralation between DGTX and KEY

Assuming the 90 days trading horizon DGTX is expected to under-perform the KEY. But the crypto coin apears to be less risky and, when comparing its historical volatility, DGTX is 1.08 times less risky than KEY. The crypto coin trades about -0.13 of its potential returns per unit of risk. The KEY is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  0.09  in KEY on December 29, 2024 and sell it today you would lose (0.03) from holding KEY or give up 32.41% of portfolio value over 90 days.

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

DGTX  vs.  KEY

DGTX

Risk-Adjusted Performance

Very Weak

Over the last 90 days DGTX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for DGTX shareholders.

KEY

Risk-Adjusted Performance

Very Weak

Over the last 90 days KEY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for KEY shareholders.

Pair Trading with DGTX and KEY

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

The idea behind DGTX and KEY 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.