Correlation Between Galaxy Digital and Pentagon I

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

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

Diversification Opportunities for Galaxy Digital and Pentagon I

-0.64

Correlation Coefficient

Galaxy Digital  Pentagon I

Excellent diversification

The 3 months correlation between Galaxy and Pentagon is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Galaxy Digital Holdings and Pentagon I Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentagon I Capital and Galaxy Digital 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 Galaxy Digital Holdings are associated (or correlated) with Pentagon I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pentagon I Capital has no effect on the direction of Galaxy Digital i.e., Galaxy Digital and Pentagon I go up and down completely randomly.

Pair Corralation between Galaxy Digital and Pentagon I

Assuming the 90 days trading horizon Galaxy Digital Holdings is expected to generate 0.71 times more return on investment than Pentagon I. However, Galaxy Digital Holdings is 1.41 times less risky than Pentagon I. It trades about 0.17 of its potential returns per unit of risk. Pentagon I Capital is currently generating about -0.1 per unit of risk. If you would invest  1,773  in Galaxy Digital Holdings on October 9, 2024 and sell it today you would earn a total of  1,210  from holding Galaxy Digital Holdings or generate 68.25% return on investment over 90 days.

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

Galaxy Digital Holdings  vs.  Pentagon I Capital

Galaxy Digital Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Galaxy Digital Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Galaxy Digital displayed solid returns over the last few months and may actually be approaching a breakup point.

Pentagon I Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pentagon I Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Galaxy Digital and Pentagon I

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

The idea behind Galaxy Digital Holdings and Pentagon I Capital 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.

Check out your portfolio center.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.