Correlation Between DigitalOcean Holdings and Fobi AI

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

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

Diversification Opportunities for DigitalOcean Holdings and Fobi AI

-0.05

Correlation Coefficient

DigitalOcean Holdings  Fobi AI

Good diversification

The 3 months correlation between DigitalOcean and Fobi is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding DigitalOcean Holdings and Fobi AI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fobi AI and DigitalOcean Holdings 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 DigitalOcean Holdings are associated (or correlated) with Fobi AI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fobi AI has no effect on the direction of DigitalOcean Holdings i.e., DigitalOcean Holdings and Fobi AI go up and down completely randomly.

Pair Corralation between DigitalOcean Holdings and Fobi AI

Given the investment horizon of 90 days DigitalOcean Holdings is expected to generate 48.29 times less return on investment than Fobi AI. But when comparing it to its historical volatility, DigitalOcean Holdings is 57.55 times less risky than Fobi AI. It trades about 0.27 of its potential returns per unit of risk. Fobi AI is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Fobi AI on October 26, 2024 and sell it today you would earn a total of  1.60  from holding Fobi AI or generate 80.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

DigitalOcean Holdings  vs.  Fobi AI

DigitalOcean Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DigitalOcean Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, DigitalOcean Holdings is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Fobi AI

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fobi AI are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Fobi AI reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DigitalOcean Holdings and Fobi AI

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

The idea behind DigitalOcean Holdings and Fobi AI 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..