Correlation Between Global Blue and DigiAsia Corp

Can any of the company-specific risk be diversified away by investing in both Global Blue and DigiAsia Corp 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 DigiAsia Corp 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 DigiAsia Corp, you can compare the effects of market volatilities on Global Blue and DigiAsia Corp 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 DigiAsia Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Blue and DigiAsia Corp.

Diversification Opportunities for Global Blue and DigiAsia Corp

0.47

Correlation Coefficient

Global Blue  DigiAsia Corp

Very weak diversification

The 3 months correlation between Global and DigiAsia is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Global Blue Group and DigiAsia Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DigiAsia Corp 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 DigiAsia Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DigiAsia Corp has no effect on the direction of Global Blue i.e., Global Blue and DigiAsia Corp go up and down completely randomly.

Pair Corralation between Global Blue and DigiAsia Corp

Allowing for the 90-day total investment horizon Global Blue is expected to generate 1.78 times less return on investment than DigiAsia Corp. But when comparing it to its historical volatility, Global Blue Group is 4.07 times less risky than DigiAsia Corp. It trades about 0.11 of its potential returns per unit of risk. DigiAsia Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  64.00  in DigiAsia Corp on November 27, 2024 and sell it today you would lose (11.03) from holding DigiAsia Corp or give up 17.23% of portfolio value over 90 days.

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

Global Blue Group  vs.  DigiAsia Corp

Global Blue Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global Blue Group are ranked lower than 8 (%) 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.

DigiAsia Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DigiAsia Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, DigiAsia Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Blue and DigiAsia Corp

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

The idea behind Global Blue Group and DigiAsia Corp 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.