Correlation Between Digimarc and Globant SA

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

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

Diversification Opportunities for Digimarc and Globant SA

0.83

Correlation Coefficient

Digimarc  Globant SA

Very poor diversification

The 3 months correlation between Digimarc and Globant is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Digimarc and Globant SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globant SA and Digimarc 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 Digimarc are associated (or correlated) with Globant SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globant SA has no effect on the direction of Digimarc i.e., Digimarc and Globant SA go up and down completely randomly.

Pair Corralation between Digimarc and Globant SA

Given the investment horizon of 90 days Digimarc is expected to generate 1.32 times more return on investment than Globant SA. However, Digimarc is 1.32 times more volatile than Globant SA. It trades about 0.11 of its potential returns per unit of risk. Globant SA is currently generating about 0.11 per unit of risk. If you would invest  2,740  in Digimarc on September 1, 2024 and sell it today you would earn a total of  649.00  from holding Digimarc or generate 23.69% return on investment over 90 days.

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

Digimarc  vs.  Globant SA

Digimarc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Digimarc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Digimarc exhibited solid returns over the last few months and may actually be approaching a breakup point.

Globant SA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Globant SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Globant SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Digimarc and Globant SA

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

The idea behind Digimarc and Globant SA 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.