Correlation Between Global Blue and DigitalOcean Holdings

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

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

Diversification Opportunities for Global Blue and DigitalOcean Holdings

-0.6

Correlation Coefficient

Global Blue  DigitalOcean Holdings

Excellent diversification

The 3 months correlation between Global and DigitalOcean is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Global Blue Group and DigitalOcean Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DigitalOcean Holdings and Global Blue 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 Global Blue Group are associated (or correlated) with DigitalOcean Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DigitalOcean Holdings has no effect on the direction of Global Blue i.e., Global Blue and DigitalOcean Holdings go up and down completely randomly.

Pair Corralation between Global Blue and DigitalOcean Holdings

Allowing for the 90-day total investment horizon Global Blue Group is expected to generate 1.05 times more return on investment than DigitalOcean Holdings. However, Global Blue is 1.05 times more volatile than DigitalOcean Holdings. It trades about 0.14 of its potential returns per unit of risk. DigitalOcean Holdings is currently generating about -0.09 per unit of risk. If you would invest  518.00  in Global Blue Group on September 22, 2024 and sell it today you would earn a total of  103.00  from holding Global Blue Group or generate 19.88% return on investment over 90 days.

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

Global Blue Group  vs.  DigitalOcean Holdings

Global Blue Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Blue Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental drivers, Global Blue sustained solid returns over the last few months and may actually be approaching a breakup point.

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 latest weak performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Global Blue and DigitalOcean Holdings

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

The idea behind Global Blue Group and DigitalOcean Holdings 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.