Correlation Between Alphabet and Digihost Technology

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

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

Diversification Opportunities for Alphabet and Digihost Technology

0.53

Correlation Coefficient

Alphabet  Digihost Technology

Very weak diversification

The 3 months correlation between Alphabet and Digihost is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc CDR and Digihost Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digihost Technology and Alphabet 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 Alphabet Inc CDR are associated (or correlated) with Digihost Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digihost Technology has no effect on the direction of Alphabet i.e., Alphabet and Digihost Technology go up and down completely randomly.

Pair Corralation between Alphabet and Digihost Technology

Assuming the 90 days trading horizon Alphabet Inc CDR is expected to generate 0.26 times more return on investment than Digihost Technology. However, Alphabet Inc CDR is 3.89 times less risky than Digihost Technology. It trades about 0.01 of its potential returns per unit of risk. Digihost Technology is currently generating about -0.03 per unit of risk. If you would invest  2,875  in Alphabet Inc CDR on December 1, 2024 and sell it today you would lose (20.00) from holding Alphabet Inc CDR or give up 0.7% of portfolio value over 90 days.

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

Alphabet Inc CDR  vs.  Digihost Technology

Alphabet CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alphabet Inc CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Alphabet is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Digihost Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Digihost Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Alphabet and Digihost Technology

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

The idea behind Alphabet Inc CDR and Digihost Technology 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.